Sugar fell to fresh two-month lows in New York after data showed a jump in sugar production in Brazil touched a sensitive nerve.

Output in Brazil's Centre South district, the main sugar producing district of the biggest sugar producing country, jumped by 150% to 59,300 tonnes in the first two weeks of February, cane industry association Unica said.

The increase reflected the relatively large number of mills left in operation in what is usually a downtime period before the next harvest starts.

While still a relatively small tonnage, the data refocused attention on the prospect of fresh Brazilian production hitting the market in earnest.

The market is being pressed by "ideas that the Brazil crop is coming along well and that the new crop supply will begin to ease the tightness on the world market", Terry Roggensack, the Hightower Report analyst, said.

"Traders see new crop hitting the market by late March and early April or sooner if the region turns dry."

'Gone for ever' 

Furthermore, there are lingering concerns that end-user demand has been dented by the jump in prices in the run up to this month's correction, which have been eased but not eliminated by Pakistan's long-awaited purchase of 50,000 tonnes white sugar.

"The consumption that has been lost isn't going to come back," David Sadler at Sucden Financial Sugar told Agrimoney.com.

"There is still a shortage on the market. But the question is how much have we lost in tonnes of consumption?"

The market had been further weakened by falling prices in India, the world's biggest consumer, as 600,000 tonnes of raw sugar which had been earmarked for Uttar Pradesh mills were authorised for use elsewhere.

Long liquidation

And technical factors were playing a role too, with many prices below their 100-day moving average, which could potentially act as a resistance level to a rebound, Mr Sadler said.

Mr Roggensack also clocked the large net long positions – 118,228 contracts – held by managed funds and speculators as of last week. The liquidation of this position looked also to be driving prices lower.

New York raw sugar for March delivery closed down 2.6% at 24.45 cents a pound, taking its losses this week above 9%.

London's May white sugar lot ended 1.7% lower at $662.30 a tonne.