Currency
In mid-December 2015, the United States Board of Governors of the Federal Reserve System decided to increase the federal fund rate, by 0.25 percentage point. This, basically, is in line with the market expectation, having no distinct impact on the global financial market. However in 2016, if the USD interest rate is increased largely and frequently, which is beyond expectation, it will significantly act on the financial market.
Now the Brazilian economy is in depression - currency BRL is depreciating. On 24 Dec., the USD/BRL exchange rate was 3.9511, up by 48.78% over that of 2.6556 on 31 Dec., 2014. The BRL depreciation is favourable for Brazil’s sugar export. Further, the global supply will rise, possibly leading to decrease in international raw sugar price.
Crude oil
The international crude oil price also has indirect effect on sugar industry. For instance, Brazil is a major sugarcane-based ethanol production country in the world - the cane sugar production is connected with the ethanol output. This means that the international crude oil price will also indirectly work upon the sugar yield.
Specifically, the crude oil index at NYMEX (=New York Mercantile Exchange), decreased by over 40%, from USD64.07/bbl on 6 May to USD37.70/bbl on 21 Dec. In the future, close attention should be paid to whether the international crude oil price can stay at over USD35/bbl, which will push up the international raw sugar price.
Imported sugar
When the international raw sugar price decreases, the profit from processing imported raw sugar will increase. This will attract domestic enterprises to increasingly import raw sugar and finally will exert pressure on the domestic-made sugar price growth. By 24 Dec., 2015, the processing profit in China was USD245/t (RMB1,566/t), still at a high level since 2011. Specifically, the highest this year was in mid-June, over USD375/t (RMB2,400/t).
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