Brazil’s Sugar Output Surges Past Forecasts in Late May, Sparking Price Rebound Despite Higher Production

Brazil’s key center-south sugar region delivered stronger-than-expected results in the second half of May, with production jumping 8.9% year-on-year to 2.95 million metric tons, industry group UNICA reported Monday.

Key Highlights:

1. Cane Crushing: Processed 47.84 million tons of sugarcane, up 5.5% YoY and exceeding the S&P Global Commodity Insights analyst forecast of 45.91 million tons.
2. Sugar Allocation: Mills directed 51.85% of cane to sugar production, significantly higher than the 48.2% allocation a year earlier and meeting market expectations.
3. Sugar Content (ATR): The crucial measure of sucrose yield per ton of cane fell 4% YoY to 124 kg, a key factor influencing market reaction.

Market Paradox:
Despite the bearish signal of higher production volumes, raw sugar futures ($SBc1) rose nearly 3% after the report, recovering from an earlier four-year low.

• Analyst Insight: “That number [the lower ATR] helped sugar prices recover in New York, despite the higher production,” explained Rodrigo Martini, Head of Sugar & Ethanol at StoneX. The dip in sugar content offset concerns about increased supply, supporting prices.