by Agrimoney.com
Sugar prices tumbled to within an ace of a four-year low after output of the sweetener from Brazil's main producing region was shown extending an August revival, despite talk of damage to the cane crop from drought.
Sugar futures for October touched 14.71 cents a pound in late morning deals in New York, down 1.5% on the day - and just 0.01 cents from matching the lowest level for a spot contract since June 2010.
The contract had been in positive territory before Unica, the Brazilian cane industry group, unveiled data showing that sugar production in the country's key Centre South district topped 3.0m tonnes in the second half of August.
That was the best performance for any half-month so far in 2014-15, which started in April, and up 8.1% from output in the first half of August.
Strong sugar levels
The increase reflected in part a rise in Centre South cane processing to 47.4m tonnes in the second half of last month, up 5.7% from production in the first half, although down 2.9% on volumes in the same period of 2013.
"The advancement of grinding in August was expected because this is usually the period of greatest sugarcane processing in the Centre South," said Antonio de Padua Rodrigues, the Unica technical director.
However, the concentration of sugars in cane - the so-called ATR - also rose to an unusually high level of 147.7 kilogrammes per tonne of cane, compared with an average of 132.7 kilogrammes so far in 2014-15.
"In some mills, the ATR determined exceeded 155 kilogrammes per tonne," Unica said.
In the second half of August 2013, the sugar level was 142.6 kilogrammes.
Drought effects
The high of level of sugars in cane allowed mills to elevate production of the sweetener despite allocating a bigger proportion of cane to making ethanol instead, at 54.7%, up 0.4 points from the level in the first half of August, and up 3.4 points year on year.
And it would appear to offer evidence of a positive effect from a period of persistent dry weather in the Centre South.
Drought, while lowering cane yields, concentrates sugar levels in the crop.
'Sudden death'
However, Unica, which two weeks ago cut its forecast for Centre South sugar production in 2014-15 by 1.15m tonnes to 31.35m tonnes, believes the benefit to cane sugar levels from dry weather will be more than offset by the dent to yields, resulting in a premature end to harvest.
The group last month also cut by 34m tonnes to 546m tonnes its forecast for the region's cane output.
Indeed, many commentators believe the cane harvest, which usually grinds to minimal levels in late November-early December, may wind up early – a so-called "sudden death" – mills run out of crop.
Unica said that three Centre South mills "have already closed" for the season.
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