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Dryness fosters huge boost in Brazil sugar output

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Brazilian mills have achieved a strong improvement in output of the sweetener - although the dry weather speeding the harvest may extract a longer-term cost.

Mills in Brazil's Centre South region, responsible for 90% of the country's production, crushed 44.1m tonnes of cane in the second half of June – a rise of 50% year on year, industry group Unica said.

Sugar output grew even faster, by 71% to 2.58m tonnes, as mills diverted more of their cane to making the sweetener rather than ethanol, and dry weather increase crops' sugar content.

The proportion of Centre South cane turned into sugar reached 45.6% - up from 41.8% in the second half of June 2013.

'Hardly any interruption'

The speedier harvest reflected drier weather than a year ago, with the lack of rainfall meaning "hardly any interruption of the sugarcane harvest activities", said Antonio de Padua Rodrigues, the Unica technical director.

In June last year, mills faced "the opposite" conditions, as "heavy rains, and an increase in the number of days mills were affected, severely impacted the crush".

However, the "excessively dry" weather is taking a toll too, with Unica reporting a "significant" drop in cane yields, underling concerns over whether crop supplies will run dry and force an early end to the 2014-15 crushing season, which typically ramps up in April, and winds down particularly from November.

While Unica has yet to complete yield statistics for June, "we can already say that the end of this season it will fall short of that originally expected", the group said.

This dynamic will "prejudice the supply of cane sugar", and could bring an early end to the grind, Mr Rodrigues said.

Stockpiling ahead of price rises

Such fears have been supported by many commentators, including Swiss-based analysis group Platts Kingsman, which last week warned of a potential "sudden death" to the Brazil cane harvest season.

Separately, Brazil-based consultancy Job Economia on Thursday flagged some reluctance in the trade to sell sugar on the spot market, in expectation of higher prices ahead.

This is "causing an accumulation of stock in the mills," Job Economia said.

"If global sugar supply reduces as from the second semester, as is forecast, it will be sold at better prices."

The consultancy highlighted a fall of 1.17m tonnes, or 20%, to 4.614m tonnes in Brazilian sugar exports in the April-to-June quarter.

By Agrimoney.com

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