BRAZIL: Sugar exports becoming less profitable
Published: 07/24/2012, 2:36:36 PM
Sugar exports from Brazil were less profitable last week as local prices climbed, according to Bloomberg.
Shipping the sweetener was 8.8% more advantageous than selling it in the domestic market, the University of Sao Paulo research group Cepea said in a report. That compares to an advantage of almost 12% a week earlier. Local prices for crystal sugar climbed 5.8% to BRL58.52 (US$28.90) a 50-kilogram (110 pound) bag in the week ended July 20, it said.
"Prices of crystal sugar in the Brazilian spot market soared last week," Heloisa Lee Burnquist, an analyst at Cepea, wrote in the report. "The increase is attributed to the firm behavior of mills in Sao Paulo, which was based on the export parity to determine prices of domestic trades."
Exports have been more profitable than local sales for seven weeks, according to Burnquist. Raw sugar traded on ICE Futures U.S. in New York has climbed 13% so far this month as rains delayed harvesting and shipments from Brazil. Dry weather in India, the second-biggest producer, has also caused concerns about a drop in production there in the 2012/13 season.
Sugar output in Brazil's centre south, its main growing region, fell 29% to 6.7 million metric tonnes from the start of the 2012/13 season through the end of June compared with a year earlier, according to data from industry group UNICA. India's monsoon, which brings more than 70% of its rain, is set to be less than normal in the whole season for the first time in three years, according to D.S. Pai, head of long- range forecasting division at the weather bureau there.
Drier weather in Brazil over the past week has helped accelerate harvesting and shipments. The amount of sugar waiting to be loaded onto vessels at Brazil's main ports dropped to 2.6 million tonnes as of yesterday, down from 2.9 million tonnes on July 20, Santos, Brazil-based consultancy SA Commodities said in a report.
"Mills in Sao Paulo are finally crushing without extended halt periods," Cepea's Burnquist said, referring to the number of times mills had to stop crushing because of rainfall.
Sales of sugar in Brazil's domestic market last week were 35% more profitable than anhydrous ethanol, the kind used to blend into gasoline, and 55% more advantageous than hydrous ethanol, used in flex fuel cars, Cepea said. Both the sweetener and the biofuel are made from sugarcane.