Bloomberg News

Kingsman Cuts Brazil’s Sugar-Cane Crush Forecast on Dry Weather

June 20, 2014

Millers in Brazil’s center south will crush less sugar cane than previously expected as dry weather is hurting the crops, Kingsman SA said in its third estimate for the 2014-15 season.

Cane growers in the world’s largest producer will probably process 575 million metric tons in the season that started in April, down from an estimate of 585 million tons, Kingsman said in a report e-mailed today. Dry weather often stunts cane growth and can reduce the sugar content.

“Due to lower agricultural and industrial yields, both reported and expected, we have decided to lower our production expectations for both sugar and ethanol in center-south Brazil,” according to the Lausanne, Switzerland-based unit of McGraw Hill Financial Inc. (MHFI:US)’s Platts.

In 2014, raw sugar prices have climbed about 14 percent, after falling in the past three years. The sweetener has dropped about 48 percent since reaching a 30-year high of 36.08 cents a pound in February 2011 as world supplies consistently surpassed demand.

With a sugar/ethanol mix unchanged in Brazil at 45 percent, sugar production is now expected at 33.2 million tons from a previous forecast of 34 million tons, according to Kingsman.

“If the government changes the anhydrous/gasoline blend in July, we will have to swing a further 500,000 tons or so of sugar to ethanol, further reducing our --mainly raw-- sugar export availability,” Kingsman said. “For the moment, however, we have assumed that they will wait for the next season.”

Global sugar demand will exceed production by 239,000 tons in the crop year from October 2014 to September 2015, Kingsman estimated in May. That would be the first shortage after four consecutive years of surplus through the 2013-14 season.

The London-based International Sugar Organization forecast Brazil’s center south cane output at 575 million tons, in a report dated June 6. That compares with 597 million tons in 2013-14.

To contact the reporter on this story: Morgane Lapeyre in London at mlapeyre@bloomberg.net

To contact the editors responsible for this story: John Deane at jdeane3@bloomberg.net Sharon Lindores, Patrick McKiernan


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