Beginning of the Sugar Cane Harvest in Brazil

The 2021/2022 sugar cane harvest started in April in Brazil.

The sugar cane harvest in Brazil starts with great expectations and also presents many challenges.

In 2020, there was practically no problem in the commercialization and exportation of sugar for foreign trade. Some port congestions, some delays with ships and nothing more.

In fact, there was a considerable increase in the export volume and this surprised everyone, after all: What to expect from a year of pandemic?

The expectation was that demand would drop a lot, but it was just the opposite. Countries that depend on Brazilian sugar stocked and bought like never before. Importers who were used to buying from India, also looked for sugar suppliers in Brazil.

Sugarcane harvest in Brazil – 2021/ 2022

Archer Consulting estimates that sugarcane production in the 21/22 harvest in the Center-South has a 4.35% reduction, compared to the 20/21 cycle, totaling 574.5 million tons of sugarcane.

The forecast previously made by the consultancy was a drop of 3.75%, with a production of 578 million tons. The drop in production is due to the dry climate that affected the development of the cane fields.

According to Archer, sugar production is expected to be 35.056 million tons, which represents a reduction of 3.254 million compared to the previous harvest. The expected production of ethanol is 24.735 billion liters from sugarcane and another 3.2 billion liters from corn, that is, 2.06 billion liters below the production of the previous cycle.

Harvest challenges

The harvest begins with several challenges and some may impact the supply of sugar to the foreign market, see:

1 – The worsening of the coronavirus pandemic in Brazil
There are days when 4,000 lives are lost in Brazil and this puts pressure on the government in relation to social distance measures such as quarantine and lockdown.

Some municipalities in the state intensify restrictive measures to combat the Covid-19 pandemic, according to the Center for Advanced Studies in Applied Economics (Cepea, from Esalq / USP).

The country has been struggling to keep essential services up and running and so far the ports have not been affected, some more links in the logistics chain may be impacted.

2 – The scarcity of containers and ships for some routes
Since the second half of 2020, international shipping has been impacted by the lack of containers that are held in China.

With this, some routes are also impacted, as the ships are waiting for the release of the containers to continue their journey.

This shortage has already generated an increase in the cost of leasing the container also in the price of shipping. This price will certainly be transferred to the importer.

If the situation worsens, shipments scheduled for the second semester may be compromised.

Sugar price at the beginning of the Sugarcane Harvest

The price of sugar depends on several factors, such as the type of sugar, packaging, quantity, distance to the port of destination, but it is fatally influenced by the market (supply x demand).

The pandemic can significantly influence consumption, both by stimulating consumption as it happened in 2020 and by repressing demand because of more severe social distance measures such as the Lockdown.

Despite the high prices of the last few months, at the beginning of the harvest it seems that the market has calmed and balanced and the price has also stabilized.

With more competitive prices, negotiations gain momentum at the beginning of the harvest and this proves to be the best period to negotiate supply contracts.

The best time to buy sugar

If you are a buyer and have demands for Brazilian sugar, then this is the ideal time to start negotiations.Request a quote with MELLO COMMODITY.
We emphasize that Mello Commodity is not authorized to deal with intermediaries and also cannot offer or pay any type of commission.

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