Picture: 123RF/beats1
Picture: 123RF/beats1

Sao Paulo — Brazil is seeing an unrivalled surge in domestic demand for sugar, as an added appetite within the world’s largest producer is aggravating woes for a world struggling from shortfalls.

Mills in Brazil’s Center-South region, which account for 90% of the nation’s sugar production, sold almost 10% more of the commodity to the domestic market from April through October than the same period last year, according to industry group Unica.

“Most of the additional volume was sold to the industry,” Unica director Antonio de Padua Rodrigues said.

Unica is still evaluating whether part of the latest data includes sugar for external markets, according to Rodrigues. Regardless, any increase in domestic demand threatens the availability of sugar exports just as the world requests record volumes to address a global deficit.

Pandemic lockdowns have changed the way people consume food while the president’s low-income aid programme has boosted demand in Brazil’s poorest regions such as the northeast, said Gustavo Theodozio, an executive at M Dias Branco, a major cookie producer in the country. The company’s sugar purchases jumped 21% this year through September to meet a similar rise in cookie sales.

Most of the sugar-consuming industries, from soft drinks to processed-tomato products, demanded more of the sweetener amid rising sales, said Bruno Lima, sugar head at commodities brokerage StoneX, referring to the firm’s clients.

“People and families are consuming soda in 2l bottles instead of the cans as it was before the pandemic,” Lima said.

Crystal sugar spot prices at mills in Sao Paulo jumped 45% this year to a record high amid strong exports and low domestic supplies, according to University of Sao Paulo research arm Cepea.

“If the impact of Covid on Brazilian sugar consumption is less than previously anticipated, as is the case in the US, the country could have less exportable surplus next season,” Maria Afonso, an analyst at Rabobank International in Netherlands, said.

The global sugar deficit will be bigger than anticipated this season due to worsening prospects in Brazil, the EU and Russia, with a shortage now expected to be 3.5 million tonnes instead of the 0.7 million ton forecast in August, the International Sugar Organisation said on Tuesday. Futures in New York jumped to a three-year high earlier this week as France slashed its output estimate due to drought, while the Atlantic’s strongest storm this year threatened crops in Central America.

Bloomberg

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