Simon Hood
Wilmar Manager Grower Marketing
The Brazil crush continues to power along and is currently around 60% complete.
UNICA’s second half of July report indicated that while year to date the crush was ahead, the fortnightly cane crush is now below last year’s comparative volume.
As each month passes, the focus on the UNICA reports intensify as analysts dissect the results to see if their projected sugar volume is still valid – or not.
Cane crushed is a key variable and accumulated volumes remain over 5% ahead of last year. What UNICA does not publish is the tonnes of cane per hectare (TCH) yield in Brazilian reporting.
A separate reporting body, CTC, released the July accumulated TCH numbers which indicated a 10% decline in the yield compared to last year. While low, it was not as bad as some had been expecting, resulting in analysts revising up their forecasts.
Overall, the range of forecasts for Brazil has tightened up to broadly 40-42M tonnes of sugar, with Wilmar remaining at the upper end of that band. By the time you read this, we may have seen the UNICA first half of August results which will again send the analysts to their spreadsheets for further revisions.
The other production country to keep in mind is India. Projection for their 24/25 crop is being revised up on a solid monsoon so far and forecasts for further rejuvenation of reservoir levels in the second half of the monsoon season.
We maintain the projection that India will not be an importer or exporter of sugar this season as increased cane production will be directed to ethanol. Next year may be a different story as relatively high domestic prices and good storages may result in a bumper crop for 25/26 season.
As the #11 sugar contract plumbs new lows, let’s hope that the old adage ‘low prices cure low prices’ holds up. Ethanol parity is still a bit away at US15c but China appears to be in the market on the buy side. The specs have got themselves into a reasonably large short position so the market could be ripe for a bounce.
Remember that the Marketing Nomination Date for 2025 Season is 31 October 2024. Even if you have nominated you can still change – if you haven’t priced, you are not locked in!
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