There is little hope, for now, of the easing of the Brazilian bottlenecks which have fuelled a 50% rebound in sugar prices, Czarnikow has warned, as it questioned "illusory" thoughts of a return to a market surplus.

The sugar merchant said that private sector companies were, unusually, being drawn to invest in Brazilian transport infrastructure, because of the profits to be made from solving logistical shortfalls which have seen the queue of ships waiting to load up extend to 123 vessels.

Sugar giant Cosan is, with rail company All, investing R$1.2bn ($685m) on increasing rail capacity at its terminal at Santos, with Paranagua Brazil's main port for loading sugar, while Copersucar is to invest R$1bn in logistics over the next five years.

However, in the short-term, there was "no immediate relief" in sight for the squeeze on exports from Brazil, the world's top exporter, with the existing infrastructure "already pushed to the limit", Toby Cohen, Czarnikow's head of analysis said.

Forty-hour queues 

A shortage of facilities for getting sugar to the ports, rather than getting it onto ships, represented the major source of hold-ups, the merchant said, noting that Brazil's rail network was one-tenth of the size of America's despite the countries being of roughly comparable sizes, meaning sugar was transported mainly by road.

"Intake capacity is the limiting factor at port," Czarnikow said, noting that while dock terminals could fill vessels at up to 45,000 tonnes of sugar per day, they were receiving sugar, at best, at a rate of 20,000 tonnes per day.

"This has led to port operators rotating slower-loading whites vessels onto berths to allow raw sugar stocks to rebuild at warehouses."

With trucks queuing for up to 40 hours to unload, the congestion was feeding back into a rise in inventories at cane mills, which "have found it difficult to continue to release sugar as there is a shortage of empty trucks to move the sugar to port".

Brazil-dependent 

Czarnikow also flagged the reliance on sugar refineries worldwide on Brazil's supplies, which were largely of so-called "very high pol" quality, containing a higher sucrose content than other raw sugars,

"The majority of the new destination refineries, which have been built since the mid-1990s, are now almost entirely dependent upon Brazil for their raw sugar supply," the merchant said.

Of the 26.0m tonnes of sugar Brazil's main Centre South region is expected to export in 2010-11, very high pol would account for 21.1m tonnes.

The region will produce 34m tonnes of sugar this year, a rise of some 5m tonnes, and helping push the market back into a production surplus, after two years of deficit.

'Illusory' surplus

However, the impact of the stronger balance sheet in depressing prices may be limited, given the appetite for replenishing run-down inventories.

"It is our view that the return to surplus in the 2010-11 season may be illusory, as production is being drawn back to meet demand from 2009-10," Mr Cohen said.

Raw sugar for October delivery closed 0.9% lower at 19.40 cents a pound in New York, after touching a four-month high of 19.88 cents a pound earlier.