São Paulo – The prices of sugar, one of the main products exported by Brazil to the Arab countries, spent the first six months of the year down, but should stabilize in the second half. From January to June, Brazil increased its shipments of the commodity by 57.3%, but the revenue generated from sales did not grow at the same rate, due to the lower prices, and climbing only 27%.The export volume reached 11.8 million tonnes, with revenues of US$ 5.46 billion.
According to the director at Bioagência, Tarcilo Rodrigues, falling prices occurred due to good harvests worldwide last year. "But the market is entering a correction phase," he says, about the future price of sugar, which may continue dropping for another 40 days, should then stabilise. "They are already at their lowest level," said the specialist in the sugar market. According to Rodrigues, the effect of the appreciated dollar on exports should also be felt by the middle of July and in August, raising sector income with foreign sales.
Sugar ranked second among the main products shipped by Brazil to the Arab market in the first half, with US$ 1.8 billion. Revenues rose 10% over the first six months of 2012, but the volume shipped rose even more, 38%, to 4.1 million tonnes. In June, alone, revenues from sugar sales to the Arab world retracted 3.62%, to US$ 274.4 million, while volumes advanced 15.20% over the same month last year, to 630,000 tonnes. That is, despite Brazil having shipped more sugar, low prices reduced income.
General exports of the commodity by Brazil showed a similar movement to that obtained for the Arab countries in June. The volume traded rose 32.9% and sales revenues only climbed 8.7% to US$ 958 million. Last month, Brazil sold 974,000 tons of sugar abroad. The price fell 18.2% over June 2012, according to figures disclosed by the Ministry of Agriculture, Livestock and Supply.
The fact that sugar prices have remained fairly low should help balance the market in the second half, as producers have had little motivation to invest in the sector. In Brazil, for example, where a third of the sugarcane crop is harvested, the trend is for mills to produce more ethanol due to the low sugar prices, says the director at Bioagência. But this lower offer should, in fact, only revert to better prices next year, believes Rodrigues.
*Translated by Mark Ament
