Brazil’s Low Sugar Availability Seen Compensated by Weak Demand

(Businessweek) – A lack of sugar in Brazil, the world’s leading producer, is being compensated by weak demand, leaving premiums for the raw sweetener in the South American nation little changed, according to Swiss Sugar Brokers.

Raw sugar for loading next month at the port of Santos, the country’s biggest, was at a premium of 0.05 cent to 0.15 cent a pound to the May contract on the ICE Futures U.S. exchange in New York, the Rolle, Switzerland-based broker said in a report e-mailed on April 20. That’s unchanged from a April 4.

“There is no immediate rush from the demand” side, Naim Beydoun, a broker at the company, wrote in the report. Weak demand is being “balanced by the lack of sugar supply from the mills to the terminals,” he said.

Rainfall in the center south delayed the start of the harvest. As the weather turned dry last week, mills have started to process, Lausanne, Switzerland-based researcher Kingsman SA, owned by the McGraw-Hill Cos. said in a report e-mailed today.

Mills are “conscious that they would have to move quickly if they were to crush all their cane and not leave any of it standing over in the fields until next year,” Kingsman said.

For loading in June, the raw sweetener was trading at a discount of 0.05 cent to 0.12 cent a pound to the futures price, data from Swiss Sugar Brokers showed. That compares with a discount of 0.05 cent to 0.15 cent a pound on April 4.

In Thailand, the world’s second-biggest exporter, raw sugar for loading from May to July was at a premium of 0.95 cent to 1.15 cent a pound to the futures price, unchanged from April 4, according to Swiss Sugar Brokers.

The premium in Thailand remains “strong,” Beydoun said.“The only explanations are the freight differential advantage of Thai versus the Western Hemisphere and the short cash trade.”

Raw sugar for July delivery slid 1 percent to 17.70 cents a pound by 7:49 a.m. in New York.