Tag Archives: sugar cane damage

Brazil’s Center South sugar production lower than 2010/11 season

UNICA is expected to announce that sugar production in the Center South region of Brazil is expected to be lower than production during the 2010/11 season which amounted to 33.5 million tonnes.  Production is therefore short of the 35 million tonnes estimated by the market for the 2011/12 season.

The news sent sugar prices soaring to achieve the highest daily gains of 2011 as Brazil approaches peak harvest season.  Older cane ratoons, dry weather in the second half of 2010 and higher sugar prices encouraging delays in replanting and use of older ratoons resulted in lower sugar yields.  The Center South produces most of Brazil’s sugar.


Brazil’s next sugar cane harvest to fall but sugar production to rise

Brazil may see its first fall in sugar cane harvest in over a decade during the 2011/12 season. The reason being the drought of 2010 which is a consequence of the La Nina weather phenomenon.  Sugar cane harvests have increased by over 50% in the past decade. The Center South’s harvest ended in January with approximately 557 million tonnes of sugar cane against 596 million tonnes forecast.  Rains over the next few months will be an indicator of what to expect during the next harvest.

However, sugar production is still forecast to increase as less sugar cane is expected to be diverted to ethanol production while sugar prices are at near 30 year highs. With this increased sugar production aimed at capturing higher sugar prices and increased revenues, sugar prices may be substantially lower by the end of the year due to the excess world supply that may follow.

Damaged sugar cane from cyclone Yasi to fuel mills in Queensland

In a bid to salvage something from recent damage to sugar cane crops in Queensland caused by cyclone Yasi in early February the remains have been turned into a renewable resource to fuel the boilers of sugar mills.  The woodchip will be used to generate steam for the boilers.

Raw sugar futures in 10% drop

Profit taking following the rallies of the past few days and price spikes has resulted in raw sugar futures dropping by almost 10% closing at 32.04 cents per lb.  Near month white sugar futures were also down by $30 to close at $814.20 per tonne.

The overall sentiment beyond the spring, subject to no significant supply/weather changes, is bearish. An improved outlook for Brazil’s center south which may be forecast to crush more cane than forecast is adding downward sentiment concerning prices.  The improved outlook for the centre south due to recent rains after poor weather earlier and the possibility of improved supply forecasts elsewhere, such as under India’s OGL, raises the prospect of offsetting any negative impacts and losses resulting from cyclone Yasi.

Sugar futures soar to record highs

Cyclone Yasi has hit Australia and the extent of damage to sugar cane crops will shortly become evident.  India’s export situation also adds to uncertainty concerning supply.  With the cyclone hitting Queensland, Australia and the potential for crop devastation, it may be advisable that India makes an announcement sooner rather than later concerning its plans for sugar exports to ease the market a little and avoid unnecessary price spikes.

Already some market forecasts on the up side for the year have been exceeded and a bullish market may continue beyond the previously anticipated fall in prices during the spring.  Nevertheless, high sugar prices, if not reversed with clearer supply data, will result in growers planting more cane to take advantage of higher available returns which in turn may help prices fall in due course later in the year.  However, weather and other factors negatively impacting supply still have the potential to provide price support beyond the spring.

It is very much a game of wait and see on several fronts.

Raw sugar futures jumped to 30 year highs briefly rising above $36 per lb to close at 35.30. While white sugar futures soared to record highs of $857 per tonne to close at $844.50.  Raw sugar futures (not necessarily near month) may be heading towards $40 resistance levels before not too long if supply concerns continue.

25% of Australia’s sugar crop at risk

Queensland, where 90% of Australia’s sugar crop is grown is likely to face cyclone Yasi shortly.  Queensland Cane Growers association announced that at least a couple of districts would be affected, falling in the expected path of cyclone Yasi.  A threat exists to 25% of Australia’s sugar crop or over 8 million tonnes.

Sugar futures are down following rallies to near 30 year highs last week.  However, supply is tight and provides support to prices despite raw sugar futures correcting by 4%.  The cyclone and uncertainty over the size of Indian exports continue to ensure supply tightness.