Buyers of raw sugar from Brazil, the world’s largest producer, are paying a smaller premium for the sweetener as demand remains slow and harvesting in the main growing region accelerated, according to Swiss Sugar Brokers.
Raw sugar for loading in August at ports in the center south, the country’s main growing region, was at a premium of 0.1 cent to 0.15 cent a pound to the price of the October contract on ICE Futures U.S. in New York, the Rolle, Switzerland-based broker said in a report e-mailed today. The premium was at 0.25 cent a pound on Aug. 2, according to data from SA Commodities in Santos, Brazil, and 0.4 cent a pound on July 29, the Swiss company said then.
Sugar output in Brazil’s center south climbed 2 percent in the first half of July after dry weather helped to speed up the harvest, according to data from industry group Unica. Above- average rainfall in May and June delayed this year’s crop. Sugar cane processing is down 22 percent from the start of the 2012-13 season there through the first 15 days of July.
“Demand at destination remain idle, and the Brazil line-up still looks to be covering old sales to the Far East and to the Middle East and African refineries,” Naim Beydoun, a broker at Swiss Sugar Brokers, said in the report. “The surplus should hit the market during the fourth and first quarter,” he said, citing unidentified traders.
Sugar supplies will outpace demand by 4.5 million metric tons in the 2012-13 season that starts October, according to ED&F Man Sugar Ltd. That follows a surplus of 9.6 million tons in 2011-12, the London-based trader said on Aug. 1. The raw sweetener has fallen 2.5 percent so far this month after climbing 7.8 percent in July on concerns dry weather in India, the world’s second-biggest producer, would cut output.
“Physical cash prices are weaker, showing muted end user demand near term,” Nick Penney, a senior trader at Sucden Financial Ltd. said in a report e-mailed today. “Whilst a weather premium is still written into prices, a lack of demand and the increasing bearish technical picture is going to weigh on sentiment unless outside factors intervene.”
Raw sugar for October delivery rose 0.3 percent to 22.07 cents a pound by 11:39 a.m. in New York.
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.