FIRE IN 60,000 HECTARES’ SUGARCANE FIELDS IN BRAZIL: GOOD OPPORTUNITY FOR INDIA TO EXPORT SUGAR :Four men have been arrested on suspicion of setting the fires : A good opportunity for India to export about 2 million ton of sugar

Ibrahim Patel

Amid concerns over Brazil’s supply following fire in sugarcane fields and good international prices, the Indian sugar industry is urging the government to permit sugar exports, Director General of the Indian Sugar and Bio-Energy Manufacturers Association (ISMA), said. October NY world raw sugar Thursday up at 19.69 cents per pound (454 gram) intraday, which was on 22 August at 17.22 cents. Oct London ICE white sugar up at $545.60 a ton. The sugarcane industry group Orplana reported that approximately 2,000 fires over the past weekend affected up to 60,000 hectares of sugarcane plantations in São Paulo.

A good opportunity for India to export about 2 million ton of sugar. This will help reduce the financial burden on the sugar industry and enable timely payments to farmers during the upcoming season and the very encouraging production figures for next year. Allowing exports would not only ensure a comfortable stock for domestic consumption and sustain the Ethanol Blending Programme (EBP), but also contribute to maintaining the financial liquidity of sugar mills, enabling timely payments to farmers.

India has restricted sugar exports since October 2023 to maintain adequate domestic supplies. India allowed mills to export only 6.1 million ton of sugar during the 2022/23 season to September 30 after allowing exports of a record 11.1 million ton in the previous season. Separately, the Indian Sugar and Bio-Energy Manufacturers Association, said reported on May 13 that India's 2023/24 sugar production from Oct-Apr fell 1.6% y/y to 31.4 million ton. Also, the Association on July 30 projected India's 2024/25 sugar production would fall by 2% y/y to 33.31 million ton.

Sugar prices have risen sharply since last Thursday when Conab, Brazil's government crop forecasting agency, cut its 2024/25 Brazil Center South sugar production estimate to 42 million ton from a previous forecast of 42.7 million ton, citing lower sugarcane yields due to drought and excessive heat. Separately, in the 2024/25 marketing year through July, Brazil's Center-South sugar production was up by 8% y/y at 20.753 million ton, according to a Unica report on August 13.

Green Pool commodity specialists estimate that these fires may have resulted in the loss of up to 5 million ton of sugarcane. As per reports, São Paulo Governor mentioned that firefighters had successfully extinguished the fires. Citi analysts said the drought and the fires will likely have a negative impact on the next crop in 2025, since some burned fields had cane growing for the next season.

Brazil's sugar and ethanol industry group UNICA said it will start to make an assessment of the situation in the fields in the coming days. Four men have been arrested on suspicion of setting the fires, which spread quickly amid extremely dry conditions across thousands of hectares of cane fields, burning into the weekend in Sao Paulo state, the largest sugar producing state in the world's top producer and exporter of the sweetener.

The burned sugarcane can still be harvested and processed, said Caio Carvalho, a sugar expert with Canaplan consultancy, but added mills will need to rush because the cane starts losing quality after just a couple of days following the burning. its 2024/25 total production guidance, adding it will process the affected cane in coming days but that it expects a reduction in the industrial efficiency in the conversion to sugar.

(Disclaimer: This analysis is only for educational purpose and is not and must not be construed as investment advice. It is analysis based purely on economic theory and empirical evidence. Readers are requested to kindly consider their own view first, before taking any position.)