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Lower than expected Brazilian sugar production

04 October 2007

According to reports from Bloomberg.com sugar output from Brazil will fall this years as more sugar is diverted into ethanol, with higher returns being yielded from this sector as a result of lower world-market prices for sugar. This news caused a 1% rise in the world sugar price on the New York futures market. However ED&F Man have warned of an oversupply of ethanol in Brazil, but they nevertheless expect world sugar prices to remain within the 9 to 12 cents/lb range. Meanwhile white sugar prices have fallen to a two-year low, as low-quality Indian white sugar comes onto the world market.

Editorial comment

World-market prices of between 9 cents/lb and 12 cents/lb, coupled with the recent depreciation of the US dollar against the euro, would be likely to require a further round of EU sugar-price reductions in 2013, so as to narrow the gap between EU and world-market sugar prices, in a context of the EU’s commitment to phase out export refunds by 2013.


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