16th Jul 2012, by Agrimoney
A revival in the cane crush in Brazil's main sugar-producing region may have set course for a sustained rebound, with Czarnikow standing by a relatively upbeat harvest forecast – which it said could yet be upgraded.
The sugar merchant highlighted the impact of heavy rains in slowing the cane harvest, and sugar production, in Brazil's Centre South region for much of the 2012-13 crushing season, leaving stocks of the sweetener in the country's ports down 20% year on year, and lifting prices.
"Sugar prices have rebounded as weather has re-remerged as a potential risk," Czarnikow said, setting a record high, in real terms, in Brazil in the April-to-June quarter.
"The market is once again pricing in a level of risk as the delayed start of the Brazilian season has delayed the onset of the surplus in the physical market."
Czarnikow forecasts a global sugar production surplus of 8.4m tonnes in 2012-13, although seasonal differences mean that much will not arrive until during calendar 2013.
'Better position'
However, the merchant said Brazil's rains would boost cane yields, providing a boost to Centre South sugar production later in 2012-13.
"Brazil is now in a better position to deliver an improved crop than it was at the start of the season," Czarnikow said.
Toby Cohen, Czarnikow director, said: "The wet weather in June has pushed up prices, and added to the delays to the start of the crushing season.
"But the extra time can only help agricultural yields and boost the final crop."
The group said it had "more confidence" in its forecast of 505m tonnes for the Brazil Centre South cane harvest, an estimate above that of many other analysts, including Kingsman on 500m tonnes and Macquarie on 485m tonnes.
In fact, its estimate "could move higher", Czarnikow said.
Vital statistics
The comments follow last week's release of data by Unica, the Brazilian cane industry group, showing a recovery to 31.70m tonnes in the Centre South cane crush in the second half of June.
While down by one-quarter on the figure for the same period of 2011, the harvest represented a 23% recovery from levels in the first half of the month.
The Centre South cane yield of 76.19 tonnes per hectare last month is higher than the 75.39 tonnes per hectare achieved in June 2011, according to the Center for Sugarcane Technology.
However, some commentators, such as Kingsman, have warned over the potential return of an El Nino weather event which, to judge by history, stands to maintain the Centre South downpours, and pressure on the harvest.
A revival in the cane crush in Brazil's main sugar-producing region may have set course for a sustained rebound, with Czarnikow standing by a relatively upbeat harvest forecast – which it said could yet be upgraded.
The sugar merchant highlighted the impact of heavy rains in slowing the cane harvest, and sugar production, in Brazil's Centre South region for much of the 2012-13 crushing season, leaving stocks of the sweetener in the country's ports down 20% year on year, and lifting prices.
"Sugar prices have rebounded as weather has re-remerged as a potential risk," Czarnikow said, setting a record high, in real terms, in Brazil in the April-to-June quarter.
"The market is once again pricing in a level of risk as the delayed start of the Brazilian season has delayed the onset of the surplus in the physical market."
Czarnikow forecasts a global sugar production surplus of 8.4m tonnes in 2012-13, although seasonal differences mean that much will not arrive until during calendar 2013.
'Better position'
However, the merchant said Brazil's rains would boost cane yields, providing a boost to Centre South sugar production later in 2012-13.
"Brazil is now in a better position to deliver an improved crop than it was at the start of the season," Czarnikow said.
Toby Cohen, Czarnikow director, said: "The wet weather in June has pushed up prices, and added to the delays to the start of the crushing season.
"But the extra time can only help agricultural yields and boost the final crop."
The group said it had "more confidence" in its forecast of 505m tonnes for the Brazil Centre South cane harvest, an estimate above that of many other analysts, including Kingsman on 500m tonnes and Macquarie on 485m tonnes.
In fact, its estimate "could move higher", Czarnikow said.
Vital statistics
The comments follow last week's release of data by Unica, the Brazilian cane industry group, showing a recovery to 31.70m tonnes in the Centre South cane crush in the second half of June.
While down by one-quarter on the figure for the same period of 2011, the harvest represented a 23% recovery from levels in the first half of the month.
The Centre South cane yield of 76.19 tonnes per hectare last month is higher than the 75.39 tonnes per hectare achieved in June 2011, according to the Center for Sugarcane Technology.
However, some commentators, such as Kingsman, have warned over the potential return of an El Nino weather event which, to judge by history, stands to maintain the Centre South downpours, and pressure on the harvest.
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