Brazilian sugar exports in December reached a record for the month after dry weather aided harvesting, adding to a global supply glut, the London-based International Sugar Organization (ISO) said on Tuesday.
Brazil, the world’s top sugar producer and exporter, exported 2.454 million tonnes in December 2012, an all-time record for the month of December, according to the ISO’s latest monthly report.
The December figure beat a previous high for the month set in 2010 of 2.227 million tonnes. Brazil’s highest ever monthly sugar export volume was 3.933 million tonnes in October 2012.
“High production has allowed Brazil to keep sugar exports relatively firm at a time when shipments normally slow down significantly,” the ISO said.
The cane harvest in the centre-south of Brazil, the main producing region, typically starts to wind down in December.
A surge in Brazilian ethanol exports in 2012, chiefly to the United States, may explain why sugar prices have shown resilience despite the global surplus, Leonardo Bichara Rocha, a senior economist of the ISO, said in an interview.
Total Brazilian ethanol exports in 2012 stood at 3.050 billion litres, higher than the lows of around 1.95 billion litres seen during 2010 and 2011, according to the ISO.
Of the 2012 total, the U.S. imported 2.050 billion litres.
In Brazil, sugarcane is used to manufacture either sugar or ethanol biofuel.
Asked whether strong U.S. demand for Brazilian ethanol had supported sugar prices, Bichara Rocha said, “Possibly. It is certainly helping to remove some sugar off the global market.”
Bichara Rocha added, “Brazil’s sugar exports in 2012 were lower than in 2010, while ethanol exports have been significantly higher than in 2010. 2011 is ignored due to a massive slump in cane output.”
In 2011 a combination of adverse weather and disappointing yields eroded cane output in Brazil.
ICE raw sugar prices have held close to Brazilian costs of production despite the bulging global surplus, estimated by the ISO at 6.184 million tonnes in 2012/13 (Oct./Sept.)
Benchmark March raw sugar futures on ICE were down 0.16 cent to 18.70 cents a lb at 1757 GMT.
In December 2012, total Brazilian ethanol exports were the highest since July 2009.
“This follows a recent revival in the bilateral Brazil-U.S. ethanol trade, with Brazil able to ship large quantities of ethanol classed as advanced biofuel,” Bichara Rocha said.
A severe drought in the United States last year led to soaring corn prices, which eroded the profitability of manufacturing corn-based ethanol in the United States and boosted opportunities for Brazilian ethanol exports.