Sugar prices extended gains to 3% after data showed the strong start to Brazilian sugar output this season fizzling out, thanks to financial woes among mills which raised concerns of downgrades to cane volume forecasts.
Raw sugar for July delivery stood up 3.1% at 17.82 cents a pound in midday deals in New York, regaining in one swoop the contract's 10-day, 20-day, 50-day, 75-day and 200-day moving averages.
While futures had started strong on Tuesday, and gained some ground after the International Sugar Organization heralded the potential return of the world sugar cycle to a "deficit phase", the rally accelerated after industry group Unica revealed that a rapid start to Brazil's production season had slowed dramatically.
Furthermore, Platts Kingsman on Tuesday ditched ideas of a world sugar surplus of 2.1m tonnes in 2014-15, forecasting a production deficit of 239,000 tonnes instead.
Unica data showed that mills in Brazil's Centre South region - which had in the first half of April, the month that the 2014-15 season opens, doubled sugar output - recorded production of 930,600 tonnes in the second half of last month, a plunge of 36% year on year.
The slowdown left overall April output for the Centre South, responsible for some 90% of domestic sugar output, at 1.47m tonnes, down 13.3% year on year.
The drop reflected in part a higher proportion of cane being turned into ethanol rather than sugar, with some talk of mills needing to keep up output of the biofuel to meet early-season contractual commitments.
Mills turned 62.9% of the cane they processed into ethanol, compared with 58.2% a year before.
But the drop was down in the main to a lower volume of cane processed as some mills delayed reopening from the close season, which starts around late November.
Of the 256 operators which had, in January, forecast opening by the end of last month, only 215 actually did so - behind the 236 open as of the end of April last year.
Unica said that mills' postponements were down in part to the dent to cane supply prospects from Brazil's early-year drought, which has prompted the association to forecast a Centre South harvest of 580.0m tonnes this season, down 3% year on year.
"Several mills postponed the start of season due to climatic conditions, in some cases reducing their estimated supply of sugar cane," said Antonio de Padua Rodrigues, the Unica technical director.
However, the sector's financial hardships also played a part, with the tumble in sugar prices from highs above 30 cents a pound in 2010 and 2011, at a time of constrained credit, proving a major setback to many groups, which had ramped up debts in the run up to the world financial crisis.
"In times of crisis, it is natural that mills in financial difficulty reduce cultivation," besides the maintenance of industrial equipment and agricultural machinery, Mr Rodrigues said.
Mills' poor financial health was highlighted earlier on Tuesday by the International Sugar Organization, which said that "the number of mills in operation in Brazil is shrinking, the tools available for the government to help the industry are less evident, and many of the large milling groups are reporting higher debt".
The ISO forecast Centre South cane output dropping 22m tonnes to 575m tonnes in 2014-15.
Unica's Mr Rodrigues flagged also the threat of wet weather ahead, given forecasts for the return of El Nino, the weather pattern linked to warm Pacific water temperatures which typically causes extreme rains in the central Brazil cane belt.
"The prospect of more wet weather in the second half," added to the financial setbacks, "may compromise the grind over the remaining months" of 2014-15, he said.
Platts Kingsman cut its forecast for world sugar production in 2014-15, on an October-to- September basis, by 1.5m tonnes to 179.5m tonnes, putting it behind the 179.9m tonnes expected for the current season.
"The harvests has got off to a good start in Centre South Brazil, but it is not clear to what extend the previous dry period has damaged the cane," the Swiss-based consultancy said.