June 23, 2015
Reuters Africa | http://goo.gl/Fovbiq
SAO PAULO, June 23 (Reuters) - Brazil's center-south region produced 1.97 million tonnes of sugar in the first half of June, cane industry group Unica said on Tuesday, a figure that missed market estimates slightly and offered mild support to sugar futures in New York.
Sugar output in the first two weeks of June was 15 percent below the volume seen in the same period last season, Unica data showed. Market projections had indicated a volume of between 2.06 million and 2.14 million tonnes.
Cane crushing in the first half of June reached 39.4 million tonnes, 5 percent below the year-earlier period and also lower than traders' estimates of 41.2 million to 41.5 million tonnes.
"The crush remains below what we had seen last year and climate conditions in the months to come will be crucial to define the crop's final size," said Unica's technical director, Antonio de Padua Rodrigues.
Crushing slowed in April and May due to above average rains. Mills have also reduced crop upkeep due to growing financial troubles as sugar prices hover at levels that are the lowest in six years.
The Unica numbers were "constructive" for prices, said Michael McDougall, director of commodities at Societe Generale in New York.
"Numbers are supportive as the mix is staying strongly in favor of ethanol, and sugar production is now 13 percent below last year", he said.
Sugar futures in New York pared losses after the numbers were released, with the October contract trading at 11.90 cents after hitting a low of 11.80 earlier in the session.
Cumulative sugar production in 2015-16 was 6.75 million tonnes by mid-June, 13 percent below last year, while cane crushing was down only 3 percent at 153.9 million tonnes.
Unica's report showed yields were almost 5 percent lower in early June than they were last year, at 124.3 kg per tonne of cane crushed.
The production mix continued to strongly favor ethanol as the biofuel is enjoying firm demand in Brazil so far this year, increasing liquidity for mills.
Producers in Brazil's center-south region allocated 57.7 percent of their cane to ethanol in early June, with 42.3 percent going to sugar. (Reporting by Marcelo Teixeira; Additional reporting by Chris Prentice, in New York, and Reese Ewing, in Sao Paulo; Editing by Reese Ewing; and Peter Galloway)