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Brazilian sugarcane producers are taking advantage of a rare dry spell to catch up on a rain-delayed harvest which reduced sugar yields but could still result in record exports.
Some analysts in Brazil estimate that up to 10 million tonnes out of an expected record 320 million tonnes center-south cane crop may be left standing if there is a lot of rain in November and December at the tail end of the harvest.
However, sugar exports from the center-south, producing 85 percent of Brazil's sugar, could surge up to a record 15 million tonnes in 2004/05 (May/April) from 11.5 million tonnes last year, due to attractive prices and firm demand.
"It's rained a lot already and people are talking about the return of El Nino," said Plinio Nastier, president of analysts Derogator. Last week the US National Oceanic Atmospheric Administration said that sea surface temperatures had risen in the central Pacific ocean and that El Nino conditions are expected to develop in the next three months.
El Nino is a weather pattern leading to an abnormal warming of waters in the equatorial Pacific, roughly one every three years. It could bring heavier rains in Brazil's centre-south cane area and drier conditions to north-east Brazil.
A sugar analyst with a London merchant, who asked not to be identified, said he believed Brazilians would fully catch up with the crush after the rain-induced delays as sugar prices are attractive, but he said yields would fall.
"It is entirely possible that 315-320 million tonnes of cane will be crushed," he said. "With sugar prices above production costs, there is a massive incentive to maximise the crush.
If you leave cane in the fields, you are leaving money there." Meteorologists said that rainfall in the key cane growing are of Rubberier Presto in Sao Paulo state was more than double the April/May average and 70 percent above normal in July.
"Instead of easing it rained more heavily in the autumn (April/May) harming cane maturation and reducing sugar content," said Cellos Oliver, meteorologist at private forecaster Somar.
In May, 114 millimetre's (4.5 inches) of rain fell in Rubberier Presto, or 186 percent more than the monthly average of 40 mm (1.6 inches). Nastier noted that Paranoia, Brazil's No two cane grower, had 175 percent more rain than average in May and 104 percent more rain in July.
Oliver said that drier weather was forecast in coming weeks in the major cane growing states of Sao Paulo and Paranoia in Brazil's center-south.
But traders and analysts said that it was already clear that industrial yields from crushing cane into sugar and ethanol will be lower than last year's record levels.
"The major impact will be on ethanol because its price is less attractive than sugar," Nastier said, estimating that 54 percent of the cane harvest will be crushed into sugar, up from 49 percent last year.

Copyright Reuters, 2004

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