Unica cleared the way for a second upgrade to its estimate of the cane crush in Brazil's key Centre South region, in the latest support to expectations for world sugar production in 2012-13.

New York raw sugar futures fell to a two-year closing low.

Only 81 mills in the Centre South had, as of the start of this month, started their seasonal shutdown to avoid the rainy season, compared with 246 a year ago, Unica, the cane industry group, said.

The dynamic reflected dry weather which "has allowed a better-than-expected harvest progress" and could lead to the Centre South cane crush for 2012-13 coming in "slightly higher" than the 518.5m tonnes previously forecast, Unica technical director Antonio de Padua Rodrigues said.

This estimate itself was an upgraded in September from an initial 509m-tonne forecast.

Double boost

The benign conditions were reflected in a cane crush for the second half of November which, at 28.52m tonnes, was three times that in the same period of 2011.

Mr Rodrigues said that this growth was "due to the dry climate, which meant weather did not cause harvest problems, and the larger number of mills in operation" in the Centre South, which is responsible for nearly 90% of Brazilian sugar output.

The region's sugar production reached 1.83m tonnes in the period, up from the 504.0m tonnes for the second half of November 2011.

Ethanol output reached 1.09bn gallons.

'Limited potential'

The data added to expectations for strong sugar supplies in 2012-13 which were stoked on Friday when Kingsman raised to 9.2m tonnes, from 6.7m tonnes, its forecast for the global surplus.

The consultancy raised by 2.8m tonnes to 180.1m tonnes its forecast for world production, including a 1.2m-tonne upgrade to 32.9m tonnes its estimate for Centre South output.

Kingsman pegged the Centre South crush in 2012-13 at 520m tonnes, and at 555m tonnes next season.

"The potential for sugar price increases is likely to remain limited for the foreseeable future given the crop prospects in Brazil, the world's leading sugar production and export country," said Commerzbank, which has forecast better prospects for values later next year.

Raw sugar futures for March delivery closed down 2.3% at 18.76 cents a pound, the lowest finish for a front contract since August 2010.