Global sugar prices rally amid key producer Brazil's presidential election
The rally has brought relief to Australian farmers, who faced months of uncertainty as input costs rose.
Global sugar prices have surged to a 19-month high of 21.10 US cents per pound as Brazil prepares for a presidential election. Brazil is the world's largest sugar producer, and the political uncertainty could impact global prices. The rally comes after months of uncertainty for Australian farmers who faced rising input costs. Raw sugar prices reached 21.10 US cents (30 cents) a pound on October 13, after falling to 13.36 US cents (19 cents) a pound in June.
The strong market has given Australian farmers some relief, allowing them to put money in the bank and feel more comfortable with expensive inputs like fertiliser and chemicals. However, speculators and future uncertainties are putting the gains under pressure. The recent crop report from Brazil showed a lower volume of cane crushed and poor sucrose content, which is driving prices up.
Analyst Eder Vieto from Green Pool Commodities said heavy rain forecast for October suggests the low sucrose levels and volumes will continue. With less sugar on the global market, prices have lifted, but lower sucrose and higher oil prices due to Middle East conflict make it advantageous for Brazilian mills to make ethanol instead of sugar.
The outcome of Brazil's presidential election, with Flávio Bolsonaro narrowly winning the first round, will be a major factor in determining whether sugar prices drop in the long term.
Written by urgent.news from ABC News AU's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
