Rains thwart Brazil drive to raise game in sugar

14th Jun 2012, by Agrimoney
Prospects for Brazilian sugar output remained under a cloud after a much-watched report said rains prevented mills catching up on cane crushings in late May, and remained a threat in June.

Mills in Brazil's Centre South, responsible for approaching 90% of the country's output, produced 1.96m tonnes of sugar in the last of May, down 18.7% from output in the same period last year, industry association Unica said.

The performance continued a record of declining output in which the impact of poor weather on ageing cane has compounded the production loss caused by a later start to the crushing season.

Overall, Centre South mills have produced 3.53m tonnes of sugar so far in 2012-13, a decline of 26% year on year.

Worse to come?

In the latest period, "rain significantly hindered the progress of the harvest", limiting cane processing to 35.62m tonnes, a drop of 17.6% year on year, Antonio de Padua Rodrigues, the Unica interim president, said.

The rain-induced slowdown, which cost mills an average of 8.8 working days last month, had extended into this month too.

"The greatest impact will be seen on the results of the first fortnight of June, during which the rate of rainfall exceeded the expected values," he said.

Unica may downgrade its estimate for average sugar levels "if the weather conditions in recent weeks to persist in the coming months", Mr Rodrigues said.

The harm caused by rain to production prospects has been compounded by the age of the cane, which for last month showed up at on average 3.74 years old, up from the age of 3.45 years for crop cut in May 2011, and well above the ideal profile.

Mills stay closed

The data follow a warning from Macquarie, downgrading its forecast for Brazil;s sugar output, over the parlous state of the Centre South industry, undermined by heavy debts and rising costs at a time of falling prices.

Unica estimated that 12 mills open last year would not operate this year.

However, the association hinted at brighter times ahead for cane stands, saying that "importantly" areas of ageing cane "once taken, are being cleared" for replanting.

Raw sugar for July recovered early losses to close up 0.3% at 19.97 cents a pound in New York.