Bloomberg News

50 Brazil Sugar Mills May Halt Crush This Month, Newedge Says

October 11, 2011

(Updates with analyst comment in third paragraph.)

Oct. 11 (Bloomberg) -- As many as 50 sugar mills in top global producer Brazil will stop processing cane sooner than usual, shutting down before the second half of this month, according to Newedge Group.

Rains in the country this week may spur producers to opt against restarting so-called crushing because of elevated costs, Juliano Ferreira, a researcher at ICAP do Brasil CTVM, said yesterday. Rain leaves millers unable to process sugar cane.

“There has been rain and there are at least 50 mills, or 17 percent, shutting down before the second half of October,” Michael McDougall, senior vice president of commodities at Newedge in New York, wrote in a report e-mailed today. “We think there will be much more than the 50.”

Sugar mills in Sao Paulo state, which accounts for more than half of the nation’s cane output, started shutting for the season in late September, the earliest in 12 years.

Mills began closing down about 30 to 40 days sooner than expected as domestic output falls for the first time in six years, Celso Junqueira Franco, president of the Union of Biofuel Producers, known as Udop, said in interview yesterday. Ethanol and sugar are both produced from cane in Brazil.

Local cane crushing probably will end by the middle of November, according to German researcher F.O. Licht. Brazil’s crop is usually harvested from mid-March to December.

Industry group Unica may release cane-crushing data for the second half of September at 1 p.m. New York time today. The figures are likely to be bullish, reflecting recent rains and lower yield and sugar content, Nick Penney, a senior trader at Sucden Financial Ltd. in London, wrote in a report.

--With assistance from Lucia Kassai in Sao Paulo. Editors: Dan Weeks, John Deane.

To contact the reporter on this story: Isis Almeida in London at ialmeida3@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net


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