A giant in the world of sugar, Brazil is currently the largest sugar producing nation in the world. In 2006 it produced thirty million tonnes of sugar, which made up 20% of the world’s total sugar production. Of that 30 million tonnes of sugar, Brazil exported 17.7 million tonnes of sugar to other nations, which comprised almost 40% of the sugar traded in the world that year. So powerful is Brazil when it comes to sugar that fluctuations of sugar production in Brazil alone can affect world sugar prices substantially, and should Brazil choose to do so, some say that it could be possible for Brazil to swamp the world market with cheap sugar. Though this is unlikely for many reasons, it has happened that in the past high levels of sugar production in Brazil resulted in a significant tumble in world sugar prices. In 2002, for instance, Brazil’s bumper sugar crop sent world prices plummeting to below five cents per pound.
Brazilian Sugar Production
Brazilian sugar cane is mainly grown in two areas of the country, the Center-South region, and the North-Northeast region. The Center-South region, (also known at the Sao Paulo region as this is the name of the state that takes up much of the region), is the larger of the two regions and lends itself better to easy sugar cane growth and harvesting as it is relatively flat and fertile. Sixty percent of Brazil’s sugar is produced in this region, and seventy percent of the country’s sugar is produced here also, as well as around ninety percent of the nation’s ethanol. Sugar cane is harvested from May to November, though it may begin slightly earlier if there is real heavy demand for ethanol or sugar. From December through to the beginning of the harvest in May it may be more difficult than usual for buyers to source Brazilian sugar. Even in the peak harvest season Brazilian sugar can be hard to obtain for reasons which are discussed later on in this article. The smaller sugar producing region of Brazil in the North-Northeast in the states of Pernambuco and Alagolas is less successful in sugar production as the terrain is hilly, and the soil is less fertile. None the less it supplies the surrounding regions with 80% of their sugar and ethanol, and accounts for almost twenty percent of Brazil’s total sugar production. This region’s harvest season runs from September through to May, and fills some of the gap left by the harvesting off season of the Center-South region.
Brazilian Ethanol Factor
Brazilian Sugar production has been affected a great deal by the production of ethanol, which is also made from sugar cane. As global fuel supplies have grown smaller, and demand for fuel in Brazil and indeed, the world, has grown larger, much of Brazil’s sugar cane crop has been turned over to sugar ethanol production. This ethanol is then used in fuel for Brazil’s many automobiles, and exported around the world. For many years the Brazilian government has stipulated that a certain percentage of all fuel in Brazil must be blended ethanol, this both saves on the cost of importing petrol and increases the self sufficiency of Brazil.
Brazilian Sugar Grades
Of the sugar that is not held back for domestic ethanol production, most sugar exported by Brazil is raw or centrifugal sugar. ICUMSA 45 sugar, the highly refined sparkling white sugar which is used in foodstuffs and can be sold on to Western consumers in its existing state makes up a very small percentage of sugar exported from Brazil. More ICUMSA 150 sugar is sold by Brazil than ICUMSA 45, but the grade of sugar most often exported is VHP Raw Brown sugar of roughly ICUMSA 400 – 1500 which is then refined in the destination country.
Why Is It So Hard To Get Brazilian ICUMSA 45?
Sugar trading features heavily in futures trading, and many crops are sold years before they are actually grown, sometimes up to three years before the sugar cane is even planted. Brazil refines relatively little of its sugar for export, so newcomers to the market will often find that much Brazilian ICUMSA 45 has already been sold quite some time before it was produced. For this reason, buyers looking to purchase large amounts of sugar, especially of ICUMSA 45, but also lower grade sugar often run into difficulties sourcing a reliable supplier.
Where Is All The Brazilian Sugar Going?
Around half of all Brazilian sugar produced is held back for ethanol production, and a substantial amount of sugar made in Brazil is also consumed by Brazilians. Sugar is very popular in Brazil, and research indicates that Brazilians are not overly concerned by the price of sugar, and will buy it regardless of fluctuations in its price. In Brazil around forty percent of sugar consumed domestically is bought by manufacturers producing various sweet foodstuffs, and the remainder is purchased by domestic consumers. For many years Brazil was the only major sugar exporter in the world where domestic sugar consumption was larger than sugar exports. This is no longer the case as sugar production has boomed in recent years driven both by population growth and a global need for alternative fuels, so exports now outweigh domestic consumption considerably in spite of the fact that sugar remains highly popular in Brazil.
Brazil’s top three international trade partners are the United States, which purchases almost twenty percent of its exported sugar crops, Argentina, which takes just over eight percent of the sugar exports, and China, which accounts for just over seven percent of Brazilian sugar exports. Other trading partners include Japan, Algeria, France, Nigeria, South Korea, and Italy.
Brazilian Sugar Supplier
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