The pace of sugar production in Brazil's key Centre South
region slowed sharply in what may be the first sign of mills slowing processing on expectations of drought-diminished cane volumes ahead.
The Centre South, responsible for some 90% of Brazilian
sugar output, produced 2.24m tonnes of the sweetener in the second half of July,
down 12.5% on volumes in the first half of the month, data from industry group
The slowdown, which also took output 12.0% below year-ago
levels, reflected in part the rains in central Brazil which slowed cane
"This decline is due to the rains that occurred in part
of the region producing sugar cane," said Antonio de Padua Rodrigues, Unica
'Prospect of reduced
However, Mr Rodrigues said that the drop of 19.0%, to 35.98m
tonnes in cane processing volumes in the latest period, compared with the first
half of July, was also down to mills preserving cane supplies in expectation of
weak late-season volumes.
Mills had also reduced operations thanks to "the prospect of
reduced supply of raw material for processing this harvest", he said.
While the volume of cane processed since the start of the harvest,
in April, has risen by 3.8% to 280.4m tonnes, it has come in at far lower yields, curtailed by early-2014 drought.
Indeed, yields are "declining", running last month ran some
10% behind those of July 2013, Unica said, noting a particular drop in the
state of Sao Paulo, at the heart of the Centre South region.
A disappointing finish to the Centre South crushing season - which tends to close late
in the calendar year before a typically rainy period ï¿½ has long been forecast
by many commentators, thanks to the hangover from drought.
However, a build-up in sugar inventories in Brazil, in part
down to slow exports, plus ample world supplies left over from four successive years
of production surplus, have rendered investors reluctant to back a recovery in
Some observers, such as Macquarie, foresee a revival in
sugar prices ahead, as the impact of the Centre South cane shortfall becomes
In New York, raw sugar for October extended losses after the
Unica data, standing 0.4% lower at 16.17 cents a pound shortly after the report.