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Sugar exports from top producer Brazil switched to being more profitable than domestic sales after rains delayed harvesting, sending international markets higher, according to Cepea.
Exports were 0.7 percent more profitable than internal sales last week, the University of Sao Paulo research group said in a report dated yesterday. The domestic market was beating exports by 1.5 percent in the May 25 to June 1 period, Cepea data from June 4 shows.
Rains in producing areas last week resulted in delays to this year’s harvest and a backlog of ships waiting to load sugar at ports. Raw sugar futures traded on ICE Futures U.S. in New York climbed 4.7 percent last week on the news.
Sugarcane crushing from the 2012-13 crop in Sao Paulo state, which was delayed due to weather conditions, was halted again last week due to constant rainfall, Heloisa Lee Burnquist, an analyst at Cepea, wrote in the report.
Demand in the domestic market remains stable and mills are concerned about production stoppages as they have pre-arranged contracts to fill, she said. Some mills still need cash and therefore sell sugar at lower prices domestically even with limited supplies, she said.
Domestic sugar sales were 25 percent more profitable than anhydrous ethanol last week, the type used to blend into gasoline, and 45 percent more advantageous than sales of hydrous ethanol, the type used in flex fuel cars, Cepea data showed.
Both the sweetener and the biofuel are made from raw material sugar cane in Brazil.
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.