Brazilian rains send sugar price to six-month high

(AgriMoney) – Sugar prices hit their highest in nearly seven months after cane industry officials revealed a 23% tumble in output of the sweetener from Brazil’s key Centre South region, thanks to rains which are continuing to undermine output.

Raw sugar futures for March hit 18.74 cents a pound in New York, the highest for a spot contract since March 15.

The rise followed the release by Unica, the cane industry group, of data showing that the Centre South cane harvest fell to 34.2m tonnes in the last half of September, down 20% from that in the first half of the month.

The drop reflected “excessive rains” which hampered cane harvesting in the region, which is responsible for some 90% of Brazilian sugar production.

Lost days

Rains in one area, Piracicaba, rose to 27.2mm in the period, from 3.8mm in the first half of the month, while Sertãozinho received 83mm.

“Harvesting machines can’t enter the plantations when the soil is very moist,” a factor which “compromised the grinding pace,” said Antonio de Padua Rodrigues, the Unica technical director.

Mills lost an average of 5.51 days’ operations in the second half of last month, up 78% from the 3.09 days in the first half.

‘Meaningful drop’

The drop in sugar production in the last half of September was even larger than that in cane, falling 23% to 2.29m tonnes, as mills diverted more crop to making ethanol rather than the sweetener.

The proportion of cane turned into sugar, as opposed to ethanol, fell to 46.9%, from 49.1% in the first half of the month.

And the rains will keep a lid on output this month too, thanks to their impact on diluting the levels of sugars in cane which, at 150.3 kilogrammes per tonne of sugar in the latest period, were running in line with those a year before.

“Laboratory analysis of cane shows that the weather in the second half of September has promoted a reduction in the concentration of sugars in cane, which should be reflected in production data for the first fortnight of October,” Mr Rodrigues said.

The decline in cane sugar levels “should be meaningful”, he said.