According to risk management company Archer Consulting, Brazilian mills hedged roughly 4.5 million metric tonnes (MMT) of the upcoming season's (2024/25) sugar export sales using ICE New York raw sugar futures by June 30, or about 17% of export projections.
Estimates
Although the estimated volume of hedging is less than what was anticipated at the same time last year (24% of exports), Archer noted that the average price at which mills reached their fixations is higher at 20.51 cents per pound as opposed to 17.51 cents/lb in the previous year.
Archer anticipates another large crop in Brazil in 2024/25, owing to favorable weather conditions thus far and the possibility that some of the sugarcane currently in the fields will be harvested early next season.
Price Opportunities
The consultancy claimed in a report that mills used the price spike in late April as an opportunity to hedge a sizable portion of sales of sugar for the following year. Late in April, the price of raw sugar increased to over 27 cents, approaching a 12-year high. Although prices have recently decreased, they are still at high levels, around 23 cents.
As mills are unlikely to have the capacity and sufficient dry weather to process the entire large 2023 crop, it anticipates that at least 15 MMT of cane from the current season will remain in the fields until processing in 2024.
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