CORRECTED-Brazil Sugar Lineup Plunges as Mills Cut Export Business

(Reuters) – Brazil’s sugar line-up, or the amount of the sweetener to be loaded at local ports, plunged in July to the lowest in at least five years, as mills refrain from sugar export business amid declining global prices.

According to shipping agency Williams, only 745,000 tonnes of sugar would be loaded to ships at Brazilian ports around July, 28% less than in the same period last year, when local production had already been reduced.

The volume is 63% smaller than in July 2017, a more normal year in terms of Brazilian production.

At sheds 20 and 21, operated by the world’s largest sugar merchant, Copersucar SA, two ships will load 130,000 tonnes of soybeans. In the terminal operated by Rumo, a logistics company controlled by Cosan, which owns 50% of No. 1 sugar producer Raízen, 10 vessels are expected to load corn.

“Global sugar demand didn’t fall, it even increased a bit,” said Julio Maria Borges, a sugar and ethanol consultant at JOB Economia. “But there is a lot of competition out there. Brazil mills would have to sell very cheap to make volume, and they don’t wanna do that”, he said.

While raw sugar prices remain near a 10-year low in New York, the Brazilian currency gained almost 10% against the dollar since May, as a crucial pension reform passed a first test in Congress. That further reduced the incentive to export sugar, Borges said.

“Many mills continue to focus on ethanol, which generates quick cash,” said João Paulo Botelho, a sugar and ethanol analyst at broker INTL FCStone. “They will wait for better prices to make and export sugar,” he said.

Expectations for a higher sugar production mix in the current Brazilian center-south cane crop did not materialize. Production mix, or the cane allocation between sugar and ethanol at plants, remains very similar to last year when mills earmarked 36% of cane to sugar production, a record-low amount, with all the rest going to ethanol.

According to cane industry group Unica, cane allocation for sugar so far in the season was at only 34.7%.