December 21st, 2016
By João Botelho and Pedro Shinzato
Chinese sugar imports
remain weak and Russian production accelerates
futures again underwent a low-trading session, with the continuous contract for
raw sugar on the New York Commodities Exchange declining 0.3% to USD 18.2/lb.
With the relatively high macroeconomic outlook (due to slight declines in the
Dollar Index and dollar/Brazilian real, along with high oil) the main bearish factor
was the release of Chinese customs data showing imports of only 140,000 tonnes for
the volume is 27.3% higher than October, it represents a decrease of 46.2% when
compared with the same period last year. In the first two months of the 2016/17
crop, imports accumulated 250 thousand tons, 59% below 2015/16 and 67% less
than the average of the past five crops. This reduction in Chinese purchases
has been the main factor keeping the physical sugar market pressured, with
important effects on futures' prices.
imports of sugar - China
– China. Elaboração: INTL FCStone
production data released today also showed that sugar production in the country
by December 12th had reached 4.96 million tonnes, 4.5% higher than the same
period last year. The progress of production however, has been limited by
processing capacity and factories have so far consumed only 73.3% of the beet
harvested, 10 percentage points below the same period of the previous crop.
monitoring - Russia
dos Produtores de Açúcar e Ministério da Agricultura - Rússia. Elaboração: INTL
is worth mentioning that the beet harvested still depends on the weather for
processing into sugar, as temperatures colder than normal could lead to the vegetable
rotting. Should all the volume collected be processed and the recovery rate
similar to that registered so far, the country's production would reach 6.77
million tonnes. Maintaining the same premises and considering production of
area which has not yet been harvested (assuming similar agricultural
productivity), Russian production would reach 6.86 million tonnes. A more
realistic though is that the recovery rate will likely to fall over the coming
weeks and some of the beet will not be processed, bringing sugar production
closer to our estimate of 6.15 million tonnes.
Ethanol on the CBOT maintains its bearish trajectory
on strong production figures in the US
ethanol prices continued their downward trajectory on Wednesday, responding to
the supply and demand latest data released on a weekly basis by the US
Department of Energy. Even with improved consumption figures, stronger production
and comfortable supply of the biofuel continued to put pressure on January
futures' prices, which declined to USD 1.548/gallon, its lowest value in a
the 10th and 16th of December, American distilleries practically maintained the
record pace of operations seen over the previous seven days, reducing the
week's production by only 0.4% to 304.6 million gallons. Compared year-on-year,
production follows weak on the value seen from the middle of December of 2015, which
was 6.5% higher. During the first 15 weeks of the US corn crop 2016/17, weekly
ethanol production averaged 295 million gallons, corresponding to a weekly
consumption rate of approximately 105.5 million bushels of corn and (to a
lesser extent) sorghum.
production and ethanol prices on the CBOT
Fonte: EIA e
CBOT; Elaboração: INTL FCStone.
the second full week of December, demand for ethanol for blending with gasoline
strengthened again, growing 2.7% and accumulating a 5.3% increase in two weeks.
At 269.9 million gallons, demand for the biofuel rallied 3.1% over the same
period last year, progressing as per the seasonal trend.
between the holiday season are often drive the country's fuel market. Between 10th
and 16th of December, implicit demand for gasoline rose 4.5% on the previous
week to reach 2.73 billion gallons, its highest value since the end of
September. Should it follows seasonality, gasoline demand should remain at a
similar level for another week before declining to its annual minimum between
January and February.
Even in the face of stronger demand, US
ethanol inventories declined insignificantly last week. Reduced by 672,000
gallons (a weekly variation of -0.1%), total supply of the biofuel remains
above 800 million gallons, equivalent to 3 weeks of consumption. Among the
regions, the main movement was seen in West Coast stocks, which declined by
3.1% over the week, and are currently at around 15% below the level recorded for
the same time last year.
Prices - Sugar
Prices - Ethanol