Strong rise in cane sugar levels depresses prices

Data showing that a late-season rebound in cane sugar concentrations had beaten industry expectations added to pressure on sugar prices, which lost early gains to close down 2%.

Investors had been prepared for some uptick in cane sugar levels in the closing weeks of the Brazilian crushing season after a series of sector rumours and analyst reports.

Canaplan, the cane consultancy, last week lifted its estimate of sugar per tonne of cane in Brazil’s key Centre South region to 135.5 kilogrammes, from 134.5 kilogrammes, citing drier weather.

However, Unica, the Brazilian cane industry group, said that the level of recoverable sugars had hit 159.4 kilogrammes per tonne of cane in the first half of this month.

"The significant increase in that 15-day period surpassed our expectations," Antonio de Padua Rodrigues, Unica’s technical director, said.

Prices dip

The figure, an increase of nearly 12% year on year, lifted to 137.7 kilogrammes the average level of recoverable sugars so far this season, compared with a figure of 136.5 kilogrammes as at October 1.

And it helped overall sugar production rise 17%, year on year, to 1.75m tonnes in the 15-day spell despite an "expected" drop in the amount of cane processed.

"Rain in the beginning of October and the fact that 46 mills have wrapped up their activities for this season explain the smaller volume of processed cane in the first half of the month," Mr Rodrigues said.

New York’s benchmark March raw sugar contract closed down 2.2% at 26.35 cents a pound, with uncertainties over the eurozone rescue talks also weighing.

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