Sugar prices revived on Thursday, despite official estimates showing Brazil, the biggest producer of the sweetener, on course for a 17% jump in output to a record high.

Production in the newly-started 2010-11 season will hit 38.7m tonnes, analysts at Conab, the Brazilian agriculture ministry's crop supply agency, said.

The increase reflected better hopes for weather after a 2009-10 season when hopes of a jump in output, thanks to increased plantings and mill expansions, were dashed by persistent rains which hampered cane harvesting and lowered the sugar yields in crop which made it to mills.

"From the agronomist's point of view, the cane crop is showing excellent development due to the combined effects of applied crop technology and favourable climatic conditions," Conab said.

'It's a weed'

While some analysts had warned that conditions in Brazil may have been too damp once more, David Sadler at Sucden Financial Sugar said they were ignoring cane's inherent robustness.

Nonetheless, Conab's figure fell short of some forecasts, which had been raised after Unica, Brazil's cane industry association, earlier this week revealed a strong start to the season in the key Centre South district.

Earlier this month, US Department of Agriculture officials in Sao Paolo estimated Brazil's sugar output at 40.7m tonnes.

Currency factor

Raw sugar for May delivery closed 3.2% higher at 15.10 cents a pound. Nonetheless, it still stood at only a little over half the 29-year high hit in early February on fears for output in Brazil and India, the second ranked producer. 

The better-traded July lot finished 2.9% higher at 15.29 cents a pound.

London white sugar for August added 2.2% to $465.00 a tonne.

However, investors should be wary of movements in the dollar, whose weakening on Thursday contributed to sugar's rise, Mr Sadler said. A softer dollar makes assets denominated in it more affordable to buyers in other currencies.

"It may not take much of a move in the dollar to send sugar the other way," he said.

Commerzbank forecast that any robust revival in sugar prices may rely on prospects for output in India turning out weaker than had been expected.