yolowire.com - The price of raw sugar has declined to its lowest level in two years due to a global supply glut stemming from overproduction in Brazil.
RawSugar has fallen below $0.18 U.S. per pound in New York trading, its lowest level since October 2022. The price is now down 7% in the month of August.
The downturn is due to fears of overproduction in Brazil, where sugarcane crushing that’s used to make raw sugar has risen sharply in recent months.
Brazil is the world’s largest producer of sugarcane and raw sugar.
Brazil sugar production for the year through the end of July is running far ahead of last year’s pace, leading to concerns about a global supply glut.
Brazil's sugarcane fields produced a record of 705 million metric tons between April 2023 and March 2024.
However, some analysts note that Brazil’s sugarcane region is experiencing an unusually dry summer this year with little rain.
The weather situation could hurt current sugarcane crop yields and lead to a reversal in both supply and prices in this year’s second half, say some analysts.
In a recent report, analysts at ADM (NYSE:ADM) Investor Services said that they expect raw sugar production to decline in the second half of 2024 owing to the dry weather conditions in Brazil.