Cosan said it was to crush less cane than expected, and raised doubts over India's export capability, but the news failed to prevent the sweetener falling sharply from a fresh 29-year high.

The Brazilian group, which unveiled a tie-up with oil giant Shell in August over its sugar and ethanol operations, cut to 54m-58m tonnes, from 58m-62m tonnes, its forecast for cane processing in 2010-11.

The reduction would cut to 4.1m-4.5m tonnes, from 4.7m-5.1m tonnes, the level of sugar that the group would sell in the year.

"The weather conditions had a negative impact on our production," Marcelo Martins, the Cosan chief financial officer, said.

Trade balance 

The comments, which follow concerns over the impact of a lack of rainfall in cane areas earlier in the season, with damage potentially seen stretching into 2011-12, followed the release of results in which Cosan revealed earnings  more than doubled to R$439.6m for the July-to-September period.

The increase was helped by higher volumes, with the group selling off sugar inventory built up in the previous quarter, and higher prices of the sweetener, which hit 33.39 cents a pound on Thursday, their highest since January 1981.

And the group raised questions over the availability of rich Indian sugar exports, which many buyers are relying on to lower prices heading into the new year – as they did, indeed, early in 2010.

"Although there is an expectation of exports of approximately 2.0m tonnes, it is estimated that [India] will also have to import 1.7m tonnes of raw sugar due to regional differences, and to meet demand of the new refineries," Cosan said.

India is due in the second half of November to decide on sugar export availability.

'More nervous' 

However, while prices also gained further support, with reports that Egypt was to buy 500,000 tonnes of raw sugar, the barrage of bullish news failed to prevent the sweetener succumbing to a bout of profit-taking, encouraged by a rise of 0.7% in the dollar.

A stronger dollar makes assets traded in the currency, such as sugar, less affordable on export markets.

Weaker prices on China's Zhengzhou exchange were also cited as a negative factor, as well as a round of automated sales as so-called sell stops were triggered.

"It's not obvious anything fundamental has changed for the worse," a London analyst told Agrimoney.com.

"But investors may be getting a bit more nervous at these higher levels and more willing to take profits."

Raw sugar for March delivery closed 9.6% lower at 29.66 cents a pound in New York.

In Sao Paolo, Cosan shares closed down 1.1% at R$28.00.