Macquarie interrupted the upward trend in estimates for world sugar production by cautioning over the impact of cold weather on Chinese cane, and downgrading its forecast for Thai output.

The bank cautioned that China's coldest winter in 20 years, which state media say has frozen coastal waters trapping 1,000 ships in ice, "may lead to some frost risk" in Guangxi, southern China,  a key sugar producing region.

"China was forecast to have a bumper crop of around 14m tonnes this season," Macquarie said.

And it cut by 300,000 tonnes to 9.2m tonnes its estimate of sugar output in Thailand, the second-ranked exporting country, in 2012-13, representing a 12% fall year on year.

Brazil hopes

The downgrades follow a series of increases to estimates for the world sugar surplus, by the likes of Czarnikow and Kingsman, in 2012-13 and upbeat hopes for next season's cane crop in Brazil, the top sugar producer, next year.

Sugar and ethanol giant Cosan, and Brazilian consultancy Safras & Mercado, have this week estimated the cane harvest in the country's key Centre South region in 2013-14 at 600m tonnes, a jump of some 13 year on year%.

"This week some extremely high forecasts were put forward by Brazilian-based analysts for the Centre South," Macquarie analyst Kona Haque said.

While the bank's downgrade to Thai output represented a drop of more than 1m tonnes in production the 2011-12 result, "we do not think this will have a material enough bullish impact to offset what remains an otherwise oversupplied world sugar market", she added.

Low sucrose levels

The comments on Thailand followed a field trip to the country last month which identified depressed levels of sugar in cane.

"Despite the continuation of dry favourable crushing weather since our visit, these yields do not seem to have picked up much," Ms Haque said, citing an average of 83.6 kilogrammes of sugars per tonne of cane, down from 93.4 kilogrammes last season.

The result may be down to widespread flowering, a process which decreases sugar levels.

"We were told that flowered cane is fairly common in Thailand, but it is likely to have impacted sucrose content," she said.

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