Drought Threatens Brazilian Sugarcane Production and Global Sugar Supply

In Short:

The scarcity of rainfall throughout March, April, and May is poised to compromise the quality of sugarcane harvested by mills in the second half of the year. Brazil anticipates harvesting less sugarcane than projected in the upcoming season due to the dry weather, which jeopardizes crop growth.

This presents a concerning sign for the raw sugar market, particularly as Brazil's share in global exports has increased amidst shipping restrictions from the second-largest producer, India. Last year, Brazil is estimated to have accounted for approximately 75% of all raw sugar traded worldwide.

The dry spell earlier this year has already prompted mills to delay the start of harvesting by a few weeks. While sugarcane fields may initially appear productive at the beginning of the season, a sharp decline in productivity is expected later on, especially for crops harvested late in 2023, which now require water to regrow.

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