The sugarcane harvest in the South-Central region of Brazil (which produces 90% of Brazil’s sugar) has risen 12% above last year’s harvest since the start of the season1. We are likely to see a record harvest this year. Brazil accounts for 22% of global output…..
ETF Securities Research
– The sugar production season has not quite ended in Brazil, with only six mills reporting that they have finished crushing (compared to 24 this time last year and 97 the year before)2 . The extended season will see higher output of sugar.
– India, which started its harvest season in October, is likely to see its sugarcane harvest rise 7.6% above last year’s3 levels. India accounts for 15% of global production.
– However, there is a growing risk that Indian raw sugar production will fall short of last year’s production levels because a number of Indian mills are protesting against high State-mandated cane prices by stopping production. We believe that State Governments will eventually succumb to their requests to lower the price of cane (after all, what famers lose in price, they gain in volume).
– Since we put the short trade recommendation on the price has fallen 5% and net speculative longs still remain stretched. Our target remains US$0.165/lb.
1. Source: UNICA (Brazilian Sugar Cane Industry Association)
2. Source: UNICA (Brazilian Sugar Cane Industry Association)
3. Based on a survey of 874 farmers across six Indian States conducted by SGS SA for Bloomberg