Brazil sugar output slows, but ahead of last year

Brazil's sugar production tumbled in the first half of this month as the main cane crushing season approaches closes, but not as fast as it did a year before, as mills delayed shutdowns.

Sugar output from the Centre South region, which accounts for some 90% of Brazil's production, came in at 1.96m tonnes for the first half of November, down 19.9% from that in the second half of October, data from industry group Unica showed.

However, the decline, typical at this time of year, as crushers begin shutdowns ahead of the rainy season, was far slower than the 31% a year before, a reflection of mills' intent to stay open longer to crush cane they were unable to process earlier in the season thanks to inundations.

Only 27 mills Centre South mills had closed as of mid-month, down from 45 a year before, and 166 in mid-November 2011, Unica said.

'Conducive to plant growth'

Their sugar output was 12.8% higher than a year before, showing a year on year rise unusual this season, when lower prices of the sweetener have encouraged mills to turn cane into ethanol.

Cane volumes were 21% higher year on year in the latest period, at 32.2m tonnes, if down 17.0% on the amount crushed in the first half of November.

Unica said that the relatively strong finish to the cane processing season had supported its expectation of a 10% rise to a record 587m tonnes in the Centre South harvest this season, a figure above that of many other commentators.

This increase "is due to conditions more conducive to plant growth and the higher rate of renewal of plantations", besides a quest to close spare mill capacity which has reduced production costs, said Antonio de Padua Rodrigues, the Unica technical director.

Market reaction

A relatively strong start to November for Centre South sugar output had been largely anticipated by investors, limiting the impact of the data on prices of the sweetener.

Raw sugar futures for March delivery stood unchanged at 17.32 cents a pound in morning deals in New York.

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