Rain has returned to Brazil and although we can’t be sure whether it will be normal from now, the risk of La Nina is almost gone, with many not expecting it to be “formed” or be strong as earlier was expected.


Brazil receiving good rainfall has the potential to recover some of the Agri yields lost this year which is about 11% on average vs. last year.


• The Sugar Mix which didn’t rise in 2024 may do in 2025.


• The Sugar content which was marginally higher in 2024 may not be that great in 2025.


• The acreage which may have risen by 1sh to 3sh % in 2024 may drop in 2025.


So, Brazil has many mixed signals for 2025/26 cane, acreage and sugar production, but we haven’t yet dealt with 2024 issue, which is lower Brazilian sugar stocks and physical demand still stronger than one year ago. Brazil has been the main source of sugar exports in 2024.


Sugar stocks in Brazil for end of Oct 24 are estimated by us to be 3,2 mln m/t lower yoy, but the Brazilian Gov was estimating to be 4,7 mln mt lower yoy by mid oct 24. We may argue the Braz Gov numbers may not fully reflect all the stocks in country, but we agree Brazil is carrying less sugar in stock than last year.


THE EU HAS GREATER EXPORT CAPACITY DUE TO LARGER CROP IN 24. OTHER NATIONS LIKE RUSSIA, UKRAINE AND PAKISTAN WANT TO EXPORT THEIR SURPLUS AND/OR STOCKS AND WILL ADD PRODUCT TO THE MARKET.


While Brazil remains the main source of sugar exports, closer to 61% during Jan/Sept in 2024 vs. 47% in 2023 and India remains out of the export market, Brazilian sugar stocks being lower create a pricing risk via a supply risk.


We will have a larger supply from Thailand from Dec/ Jan 25 and Central America new crops will start being available from Nov 24. The EU has greater export capacity due to larger crop in 24. Other Nations like Russia, Ukraine and Pakistan want to export their surplus and/or stocks and will add product to the market.


Higher prices and greater supply of White sugars will reduce demand by tolling Refineries i.e. Raws in Refined out. The market is already reacting to it via lower prices for Refined sugars and/or Futures and lower White Premium, therefore demand for Raws should be reduced.


So, with lower stocks in Brazil and the need to reduce exports in about 3,5 mln m/t till April 25, a combination of factors like other suppliers and lower demand will need to play their part.


When the new crop from Brazil starts arriving at ports in April/May 25, Brazil will be needed again, as the alternative solutions to lower supply from Brazil would have been exhausted by them.


Short term, US elections may cause investors take time before deploying risk again and therefore the S&D may be “louder” and time will tell how import Brazilian sugar supply is/was and how alternatives were explored and were available.


With uncertainties for the coming Brazilian cane crop and India out of the export market, supply risk remains an issue to deal with for the next 6 months.


Alberto Peixoto E: albertopeixoto@apcommodities.london T: +44(0) 7570 714 981


19 | ADMISI - The Ghost In The Machine | Q4 Edition 2024


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