Dry weather allowed Brazilian cane mills to ramp up processing volumes, but output of sugar came in below year-ago levels, despite the improved returns from producing the sweetener rather than ethanol.
Mills in Brazil's key Centre South region, responsible for nearly 90% of sugar output in the top producing country, crushed 46.5m tonnes of cane in the second half of August, industry group Unica said.
That made it the best period so far for processing in 2013-14, which started in April, and took total volumes crushed for the season to 363.5m tonnes, up 4.3% year on year, and a figure approaching the 380.2m tonnes achieved in the record season of 2010-11.
"The number of days lost by Centre South mills in August was small," Antonio de Padua Rodrigues, Unica technical director, said, adding that many sites operated near capacity.
Sugar vs ethanol
However, sugar production came in at 3.21m tonnes, a figure which, while also the best period of 2013-14, represented a 3.7% decline on the year-ago result.
This came despite the "improved returns" from making the sweetener rather than ethanol from cane, thanks to improved prices and weakness in the Brazilian real which improves the case for making a particularly important export product.
However, the ability of mills to switch between making sugar or ethanol "does not depend only on relative prices, but also on various technical factors, production capacity and commercial criteria," Mr Rodrigues said.
Some mills, for instance, have "sales contracts entered into previously". Earlier in the season, when production of sugar was notably less profitable than of ethanol, many mills were constrained by
Mills overall turned 48.6% of cane into sugar in the latest period, up from the 47.8% in the first half of August, but below the 51.6% in the second half of August last year.
The idea of Centre South mills producing less sugar than might be expected tallies with comments from Czarnikow last week, which noted that mills were selling sugar at a premium to futures, rather than the discount of some 1 cent a pound which is more typical during the peak production period.
In New York, the immediate market reaction was to help futures extend gains, with the October lot adding a further 0.07 cents to reach 17.19 cents a pound, a gain of 1.1% on the day.