Switch to Ethanol Could Save the Sugar Market from Collapsing - An F. O. Lichts Report

The relentless slide in No. 11 raw sugar futures seemingly came to a halt in late June when prices touched a 16-month low of 12.53 cents/lb, while London white sugar futures continued to drop and dipped to as little as $360.40 a tonne in mid-August, the lowest level since September 2015.

In the case of raws, rising crude oil prices as well as the appreciation of the Brazilian real to 3.11 against the US dollar at the time of writing from 3.34 in June aided sentiment. The real's gains reduce Brazilian millers' incentive to sell dollar-denominated sugar. What’s more, the Brazilian government's decision to tax imports of US corn ethanol was also supportive as this makes domestically produced cane ethanol more competitive and may encourage mills to divert more cane to ethanol production and produce less sugar. Prices also recently received support from significant gasoline price increases by Brazil's stat-run oil company Petrobras, which came in the wake of sharply rising gasoline prices following Hurricane Harvey.

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