SAO PAULO: Brazil's main center-south cane crop produced 2.33 million tonnes of sugar in the first half of June, on the high end of market expectations and up from 2.03 million tonnes in late May, the main sugar and ethanol lobby Unica said on Wednesday.
In its biweekly harvest report, Unica said clear weather over the past few weeks had helped sugar output in the center-south, which surpassed last year's output of 1.80 million tonnes during the first fortnight of June by almost 30 percent.
Markets had estimated production in early June from the world's largest exporter of sugar at between 2 million and 2.3 million tonnes. Sugar futures sank to 17.53 cents/lb after the initial output numbers from Unica but recovered to settle at 17.7 cents/lb, slightly firmer than before Unica's report.
Unica said lack of rain was hurting development of cane due to mature later this year. Rainfall over the past month in the cane belt was 50 percent less than a year ago, Unica said.
"The persistence of the drier climate since the start of harvest ... is severely hurting the development of the plants, intensifying the agricultural losses," Unica's technical director, Antonio de Padua Rodrigues, said.
Unica said seven mills had started operations since the beginning of June, bringing the number of mills crushing to 269. Another 16 mills are expected to start by the end of June, Unica said.
Traders said the favorable weather for harvest was likely to allow mills to reach the end of crushing more than a month earlier than expected.
Typically, most mills end crushing in December. "Yields are still decreasing and we have not started to crush the cane that was mostly damaged by the drought," said Bruno Lima, manager for sugar and ethanol at INTL FCStone in Campinas, Brazil.
"This means we expect the tonnage of cane per hectare just to decrease from now on."
Record high temperatures and severe drought hit Brazil's main cane in January and February, hurting yields in all the crops. Rains returned in March but have been below average in many areas.
Mills have stepped up sugar production because of drier weather and improved levels of recoverable sugars in the cane.
Recoverable sugars, also known by the Portuguese acronym ATR, grew to 129.98 kilograms/tonne of cane crushed, up nearly 4 percent from a year ago and up 1.5 percent from late May yields.
Mills in the first half of June allocated 45.4 percent of their cane to sugar, up from 42.3 percent this time last year and 43.8 percent in late May.
Since the official start of the season on April 1, mills in the center-south produced 7.77 million tonnes of sugar, up 4.4 percent from a year ago. They produced 6.56 billion liters of ethanol over the same period through mid-June, up 2.8 percent from last year.
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