Brazilian Sugar-Export Profits Tumble as Futures Retreat

(Businessweek) – Exports of sugar from Brazil, the world’s largest producer, were less profitable in the week ended Aug. 3 after the futures traded in New York retreated, according to Cepea, a University of Sao Paulo research group.

Shipping the sweetener was 0.4 percent more advantageous than selling it in the domestic market, Cepea said in a report e-mailed yesterday. That compares with 5.3 percent a week earlier. Raw sugar futures declined 2.3 percent on ICE Futures U.S. in the same period as dry weather helped the harvest advance in Brazil and concerns about a below-average monsoon in India, the second-biggest grower, subsided.

Brazil’s sugar-cane output climbed 3.9 percent in the first half of July after dry weather helped accelerate the harvest, data from industry group Unica showed. The amount of cane processed in the last 15 days of July may reach a record, according to broker Newedge Group in New York. A revival in India’s monsoon, which accounts for more than 70 percent of the country’s annual rainfall, will benefit crops including sugar cane, according to L.S. Rathore, director general of the India Meteorological Department.

“In Brazil, the steady weather, without rains, continued to facilitate the harvesting of the sugarcane and exports,”Heloisa Lee Burnquist, an analyst at Cepea, said in a report e-mailed yesterday. “Weather conditions have improved in Maharashtra state, the main producing state in India.”

Local prices for crystal sugar slid 0.7 percent to 59.02 reais ($29.05) a 50 kilogram (110 pound) bag last week, Cepea data showed. Sugar sales in the domestic market were 41 percent more profitable than anhydrous ethanol, the kind used to blend into gasoline, and 61 percent more advantageous than hydrous ethanol, used in flex-fuel cars, it said. Both the sweetener and the biofuel are made from raw material sugar cane.

Crystal sugar, used in Brazil’s domestic market, has an International Commission for Uniform Methods of Sugar Analysis level of between 130 and 180, according to the Cepea website. A lower level corresponds to a higher degree of whiteness. The refined variety traded on NYSE Liffe calls for an ICUMSA level of 45.

To contact the reporter on this story: Isis Almeida in London at  Ialmeida3@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at  Ccarpenter2@bloomberg.net.