Fires in Brazil Impacting Sugar Supply Chain, Prices

Two of the largest sugar and ethanol producers in Brazil late on Monday disclosed initial estimates of damages from fires that have burned sugarcane fields in the country’s top state for sugar production. As a result, sugar prices have surged by 4.2% and the fires have disrupted the entire supply chain.

Brazil’s largest sugar group Raizen SA (RAIZ4.SA) estimated that about 1.8 million tons of its sugarcane, including what it sources from suppliers, had been affected by the fires, or about 2% of the total expected for its 2024/25 crop. Another large Brazilian sugar and ethanol producer, Sao Martinho (SMTO3.SA), opens new tab said on Monday in a securities filing that 20,000 hectares of its sugarcane were impacted by the fires.

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. Sao Paulo said there were no more active fires in sugarcane fields in the state on Monday, but dozens of municipalities were still on high alert for fires.

Although the direct land hit from the fires is small, experts said that mills will still lose sugar production from those burned fields next year. Sugarcane is usually allowed to regrow five times before it is replanted at a significant cost to the producer, (AgNews.) Some of the fires destroyed fields that had already been harvested.