Unica, naming data date, unveils sugar output fall

Unica unveiled a date for its long-awaited revision to forecasts for the cane crush in Brazil's Centre South as it revealed a fallback in sugar output in the key producing region, as weather turned less benign.

The industry group, which in April pegged the Centre South cane harvest at 589.6m tonnes, with sugar output seen at 35.5m tonnes, said it would on October 1 reveal revised projections.

Many other observers, including Conab, the official Brazilian crop bureau, have already lowered their forecasts thanks in part to some weather interruptions to the cane harvest, and the direction by mills of more of the crop than initially expected to making ethanol, rather than sugar.

Kingsman, the influential consultancy, two weeks ago lowered its estimate for sugar output in the Centre South, which is responsible for some 90% of Brazilian output, by 300,000 tonnes to 34.1m tonnes, "major due to lower sugar content".

"Despite the good weather over the past two months, ATR [sugar concentration] levels haven't yet recovered from the rains back in April," the Swiss-based group said, although it said its forecast for a 585m-tonne cane crop was "still achievable".

Czarnikow, the London-based merchant, revealed earlier this month it had cut its cane harvest forecast by 10m tonnes to 585m tonnes, and its estimate for Centre South sugar output by 1.9m tonnes to 34.1m tonnes.

'Exceptional conditions'

Unica said that, in the first half of this month, Centre South mills had processed 42.8m tonnes of cane, up 2.1% on the crush in the first half of September 2012, but down 11.7% on the volume handled in the last half of August, which the group said had shown "exceptional conditions for cane harvesting".

Sugar production had come in at 2.96m tonnes, down 5.6% year on year and a 7.8% decline on output in the second half of August, reflecting too the continued preference by mills for producing ethanol rather than the sweetener from cane.

The proportion of cane turned to the sweetener was, at 49.1%, down 2.5 points year on year, with a 2.9% drop in ATR, the level of sugar in cane, down nearly 3% too.

The decline in sugar output extended an unbroken trend going back to the second half of June.

'Disruption by rains'

Mills often favour ethanol rather than sugar when ATR levels fall, a trend which may continue into the latter stages of the season, as Macquarie warned earlier this week.

"Brazil's cane harvest is seeing some disruption by rains in the Centre South," the bank said.

"Cane crushing is now 70% complete, and any rains from now on could further affect sucrose content, which is already running behind last season's, pushing more of the cane towards ethanol."

Raw sugar futures, which already stood higher before Unica's statement, extended gains to stand at 17.41 cents a pound in New York at 13:30 local time (18:30 UK time), half an hour after the data was released.

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