(Reuters) – Brazil’s main cane belt
produced a record amount of sugar in an early start to the
harvest season, industry association Unica said on Wednesday,
sending prices lower in New York despite expectations of a
global deficit in the sweetener this year.
In its first forecast of the season for the world’s largest
sugar producer, Unica said mills in the region will crush
between 605 million and 630 million tonnes of cane in 2016/17
compared with the 617.7 million tonnes crushed in the season
that ended on March 31.
Sugar output this season is likely to be the highest in the
past three years at 33.5 million to 35 million tonnes, up from
the 31.2 million produced last season, Unica said.
Sugar futures prices on the New York ICE exchange
began falling shortly before the release of Unica data and were
last down 1.7 percent at 15.51 cents a pound.
News from Unica that mills produced a record 1.43 million
tonnes of sugar in the first half of April, up 261 percent from
a year ago, also helped pressure futures prices. It is one of
the industry’s earliest starts to the crushing season as mills
try to get a jump on the bumper crop.
Ample rains in late 2015 and early 2016 have boosted the
yields from cane fields to their highest since 2009, Unica said.
But dry weather in recent weeks helped mills crush the
massive crop virtually uninterrupted, Unica said.
The association said 205 of the region’s roughly 300 mills
were operating by mid-April compared with 137 in late March.
The region produced 1.27 billion liters of ethanol in early
April, up 124 percent from a year ago, it said. Prices for the
biofuel have fallen sharply in recent weeks, surprising mills
and analysts alike.
The weaker returns from ethanol, the relatively weak rate of
the real to the dollar and forecasts for a global sugar
deficit after several years of glut are expected to induce mills
to produce as much sugar as capacity permits, analysts say.
Czarnikow on April 14 became the latest sugar industry
expert to raise its forecast for an anticipated global supply
deficit of the sweetener.