Huge quantities of sugar exports are leading port terminals in Brazil's center-south to work at close to full capacity, which could delay future shipments, traders and analysts said on Friday. Strong activity at ports, however, should not reduce total exports in the 2009/10 season, they added.
Brazil, the world's largest sugar exporter, is the last big provider now left after main rival India turned from net exporter into a net importer of sugar on a steep drop in output. More than 70 vessels this week are waiting to load sugar at Brazil's center-south ports, according to the latest line-up. Rains in the second half of August contributed to a slower loading pace.
"This month, Brazil's supposed shipping limitation... will be put to test, especially in raw sugar," said a director at an international trading house based in Sao Paulo who asked for anonymity. Yet the current waiting period to load - between 4 and 15 days - isn't long, said Plinio Nastari, president at Datagro consultancy.
Instead, he sees production capacity at mills and lower-than-expected cane quality due to rains as the biggest limitations to sugar exports this season. Shipments from the center-south reached 2.3 million tonnes in July, according to Job Economia, which expects average monthly exports of 2 million tonnes in 2009/10. Due to disruptions caused by rains, August exports are seen close to 2 million tonnes. A few shipments could be postponed to September, when shipments should total between 1.8 million and 1.9 million tonnes, the trading house source said.
ACTIVE INDIA Sugar shipment capacity in the center-south is close to 2.5 million tonnes per month, according to market estimates, but that can fall considerably in the face of persistent rains. "Exports are at our limit, but this capacity is enough to move all the sugar we have for export. We don't have more than that," said Julio Maria Borges, director at Job Economia. "There could be delays, but shipments will occur according to ports' capacity," he added.
In addition to India's strong appetite for Brazilian sugar this season, traders expect high demand from the United States and Russia, where local sugar prices have risen sharply in recent days to around $900 a tonne. India has been an active buyer of Brazilian sugar, mainly after a recent drop in sugar prices to around 21.50 cents per lb. Many ships in the line-up are headed for the country and Dubai.
India is believed to have bought around 900,000 to 1.1 million tonnes of raw sugar from Brazil, some traders said. But others said actual buying was not higher than 300,000 tonnes. Sugar futures in New York went up again above the 23 cents per lb mark, close to the highest level in three decades. Export discounts for prompt delivery in the center-south are traded at around 95-100 points below the October contract in New York, smaller than a week ago, when most of the deals were at a 120 points discount, traders said.
"Discounts are still high because producers want to take the opportunity to sell at these prices," said Nastari. Boosted by high sugar futures, domestic prices in the local currency surpassed the 50-real mark, at 50.32 ($27) per 50-kg bag on Thursday. In August, local sugar prices have risen nearly 20 percent, said Cepea/Esalq, the agricultural think tank of the University of Sao Paulo. Local hydrous ethanol was traded at around 920 reais ($490) per cubic meter (1,000 liters), including taxes, at the mill, down from 950 reais a week ago, said Mikz brokerage.
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