Heavy rains in Brazil curb sugar production despite high prices

Heavy rains in Brazil’s Center-South region are limiting sugar production despite a sharp rise in global prices. Excessive moisture is reducing sugar content in cane, prompting mills to divert a larger share of the crop to ethanol production.

Wet weather is also slowing the harvest. Some parts of Brazil’s sugar belt have experienced one of the rainiest winters in more than 100 years, restricting mills’ ability to increase sugar output even as market conditions become more favorable.

Raw sugar prices have risen by more than 21% over the past month, while sugar production has become around 20% more profitable than ethanol. However, analysts note that late in the season, weather remains the key factor determining how mills allocate sugarcane between sugar and ethanol.

StoneX has already cut its sugar production forecast for Brazil’s Center-South region from the initial 40 mln tons and now sees output potentially falling below 38 mln tons. The forecast could be revised lower again if heavy rains persist.

The situation is significant for the global market, as Brazil is the world’s largest sugar producer. Further harvest disruptions and lower sugar yields could tighten global supply and keep prices elevated.

Tags: Brazil, prices, sugar