A return to dry conditions helped mills in Brazil's Centre South to their best period for cane crushing this year, although operational dynamics kept a lid on output of sugar despite improved prices.
Mills in the Centre South - responsible for nearly 90% of sugar output in Brazil, the top producing and exporting country – processed 46.3m tonnes of cane in the first half of this month, cane industry group Unica said.
Besides being 4.7% higher than the crush in the same period of last year, it represented the strongest half-month for processing since the season began in April and reflected benign weather.
"The number of days lost in the first half of August was very low, a fact that enabled mills to operate near production capacity this year," Antonio de Padua Rodrigues, the Unica technical director, said.
Sugar vs ethanol
The rise in cane processing allowed a strong period for sugar output too, at 2.91m tonnes, also the highest figure so far this season.
Indeed, mills increased the proportion of cane going to make sugar rather than ethanol, with the sweetener accounting for 47.8% of the crush in the latest period, above the season average of 43.7%.
This dynamic was encouraged by the recovery in sugar prices, which on New York's futures market hit their highest during the period since June.
Against the backdrop of a weakening Brazilian real, this "promoted the recovery of sugar prices in reais", besides boosting the appeal of the sweetener compared with ethanol, which as a largely domestically-consumed product is less affected by dollar-denominated futures.
'Flexibility of mills is limited'
Indeed, Unica said that the switch to sugar would have been larger still had it not been for limitations on mills' ability to switch crops at a time when crushing volumes are near their seasonal peak.
"The flexibility of mills is limited in this harvest period," Unica said.
In fact, sugar production in the first half of August was down 3.9% on that in the same period of 2012, when mills converted 51.5% of cane into the sweetener.
Indeed, the immediate market impact of the data in New York was to help benchmark October futures pare losses, to recover to 16.48 cents a pound.
However, the contract had by 13:10 local time (18:10 UK time) returned to 16.40 cents a pound, down 1.3%, near to where it had stood before the Unica data were released.