World sugar prices are rising amid heatwaves in Brazil, but they continue to fall in Ukraine

Sugar stock prices continued to rise this week on forecasts of dry and hot weather in Brazil's sugar-producing regions.

On the London Stock Exchange, October white sugar #5 futures for the week rose 6.7% to a 5.5-month high of $555/t (+10% for the month), and cane sugar #11 rose 13, 7% to the highest level since September of $21.16/lb or $466/t (+17% for the month).

According to forecasts, dry and hot weather will prevail in the states of São Paulo and Mato Grosso in the next two weeks, which will reduce the yield of sugar cane. In August, the heat in the country led to severe fires that damaged up to 5 million tons of cane in the main sugar-producing state of São Paulo.

The strengthening of the real against the dollar to a 4-week high is also supporting the quote as it hampers sugar exports from Brazil.

Rising oil prices will lead to higher ethanol prices and lower cane sugar production. According to the Unica association, in the second half of August, sugar production in the Central-South region decreased by 6% compared to the corresponding period last year to 3.258 million tons.

In Ukraine, sugar prices continue to fall against the background of increased harvesting and prospects for a good harvest, as well as restrictions on sugar exports to the EU. The quota for sugar supplies to the EU for 2024 was 262.6 thousand tons and was exhausted already in May. The next quota will be opened from January 2025.

In 11 months of 2023/24, Ukraine exported 700,000 tons of sugar, of which 307,000 tons went to the EU.

Since the beginning of September, sugar prices have decreased by 5-10% to UAH 21,000-22,000/t or $420-450/t (without VAT) based on FCA, although a year ago they reached $600-700/t (without VAT) FCA .