The fires brought an upward movement for sugar and the interest rate cut by the FED increases the appetite for risky assets (iStock.com/AndreyPopov)
The prices of sugar continue to climb as the market tries to understand the impacts of the fires and burning that hit the sugarcane fields. On Wednesday (18), futures due in October on the Intercontinental Exchange US closed up 5.81%, at US$ 0.21, after closing on Tuesday up 4.2%.
According to Marcelo Di Bonifácio, analyst at StoneXthe upward movement in prices was not expected, even though a bullish sentiment was expected, amid the drought in the Center-South, the advance of fires and the wait for rain.
“The rains should return in October, at least in sugarcane fields in São Paulo, according to the latest weather reports. The fires brought an upward movement and speculators are comfortable in the short position, returning to buying, even if it is a speculative movement, amid concerns about the harvest in the Center-South.
The analyst highlights that the movement may be linked to the review of numbers by the funds, since when there is a large buying movement, this results in a domino effect on prices.
“On the macro side, the US’s 0.5 pp interest rate cut by Fed the search for risk assets increases, a positive scenario for commodities. I believe that it is really a reorganization of the funds, with few active sellers in the market, as well as due to the not so advanced hedge in the Center-South for the 25/26 harvest”.
The kick-off for global sugar harvests
Bonifácio comments that the harvests of important players of the sugar market now begin between September and October, with projections pointing to productive growth in Europe, Thailand and China.
“India, even though it will not export, with the expectation of diverting more sugar to ethanol production, expects a good harvest, with sufficient stocks to meet the country’s needs. The great uncertainty lies in the problems seen in the Center-South and perhaps the market is pricing this in. We will need a very rainy off-season to recover this water deficit,” he says.