REPORTS

The main drivers of the sugar market were supportive in the past week but prices failed to increase. NY11 front month contract ended the week at 10.91c/lb,a marginal decrease of 0.2% when compared with the previous Friday. Despite no sign of improvement in the COVID -19 crisis in Brazil, BRL showed a solid performance, strengthening by more than 3% to 5.4. Oil prices have also maintained its recovery, gaining more than 6% week-on-week and surpassing the US$35/bbl barrier. UNICA’s results continues to show a very sugar oriented crop, reinforced by the fact that the C/S Brazil has been experiencing dry weather. In fact, the dryness in Brazil has been quite strong and cane fields by the second half of the year may be in urgent need of water, or risk seeing lower cane yields. The hydrous ethanol sale figure published by UNICA ended only 25% lower than the past season, diminishing somewhat the risks of ethanol storage constraints, and supporting prices which have continued to recover in the past 5 weeks. The latter might encourage mills switch to ethanol in the second part of the year. The news of an additional berth dedicated to sugar in Santos in July was interesting; this new unexpected capacity could have been behind the Jul-Oct spread behaviour of the past days, which is back to -10 levels, after having been inverted for a short while.