Frost Bites Brazilian Sugar Crop As Prices Zoom Higher
The South American country is one of the world’s leading coffee, sugar, and orange producers experienced a cold snap and drought this growing season in the Center-South area that has significantly damaged crops.
We have focused on coffee and orange markets and how prices are sloping higher after harvest output will likely come in well below average.
Now we’re setting our eyes on the sugar market, where losses in production, exacerbated by an already tight global supply, is fueling higher prices that may be sticking around for the next 18 months.
“We are getting into a boom cycle for the commodity prices,” said Pierre Santoul, chief executive officer in Brazil of France-based Tereos SCA. He said sugar prices are expected to remain elevated through early 2023.
Tereos’s sugar-cane crushing may fall to the lowest levels since the 2009-10 season, to 16.6 million metric tons, or about a 21% reduction from 20.9 million crushed in 2020-21. The nation’s sugar-cane industry group Unica said sugar content in cane fell in the country from a year ago, while cane yield dropped 18%.
Santoul said the extent of the devastation is still unknown. He said mills had increased harvesting to avoid further cane deterioration. He added that if the weather improves in October and rains relieve droughts, the dismal scenario may slightly improve.
Weather disruptions in Brazil mean higher prices for coffee, oranges, and or sugar. Since most of these farm goods are exported, and shipping costs are at record highs, it’s only a matter of time before US wholesalers pass along the costs to consumers.
Food inflation doesn’t seem to be waning anytime soon. Just yesterday, Tyson Food’s CEO said costs are rising faster than it can hike retail prices.
Tue, 08/10/2021 – 23:05