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Drought cuts Brazil sugar exports to six-year low

Drought cuts Brazil sugar exports to six-year low

Posted by Laura Zúñiga on October 07, 2014

Brazil's sugar exports will fall further than had been thought, to a six-year low, thanks to a drought-hit cane harvest, with the disappointing volumes only partially offset by better hopes for Australia and Thailand.

Brazil, the top sugar producer and exporter, will ship 24.0m tonnes of the sweetener in 2014-15 (May to April), the US Department of Agriculture bureau in Brasilia said.

That represents an even deeper drop than had been expected from last season's 26.2m-tonne result – the USDA has officially forecast exports falling to 25.3m tonnes in 2014-15 – and would represent the lowest volumes for six years.

It would also represent a second successive annual decline in shipments for the first time on records going back to the 1980s.

'Irregular weather'

The USDA bureau said that its downgraded estimate was "due to lower expected sugar production, therefore lower expected exportable supply".

Indeed, Brazil's sugar output was pegged at 35.8m tonnes, 1.0m tonnes below the official USDA forecast, with the shortfall due to downgrade to 32.6m tonnes in the estimate for production from the important Centre South region.

Nonetheless, the estimate is above those of many other commentators, such as Brazilian consultancies Datagro and Job Economia, and Australia-based Green Pool.

The USDA bureau, whole noting "lower agricultural [cane] yields… as a result of irregular weather conditions", pegged the Centre South cane harvest at 565m tonnes, a figure also above that of many other commentators.

Brazil's cane crop, like its coffee plantations, has been tested by unusually dry conditions in many central regions of the country.

Thai prospects

However, USDA staff were more upbeat over sugar shipments from other major exporting countries, noting, with the Bangkok bureau foreseeing Thai volumes hitting 8.5m tonnes in 2014-15.

That would be a rise of 1.0m tonnes year on year, and is 200,000 tonnes more generous than the USDA's official forecast.

While dryness has curtailed Thai cane output - with rains "far below normal averages, particularly in major cane growing areas in the northern, western and central plain regions" - export volumes will be enabled by ample carry-in inventories.

Shipments to other Asian countries will be supported by a drop to 0-10%, from 5-40%, in duties on imports to nations which were members of the Asean trading bloc.

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