Brazil's crystal sugar touches all-time high

A 50-kg bag of crystal sugar reached 100.68 reais ($32.12) at the close of business in Sao Paulo on Wednesday, an all-time high as the cane harvest ends earlier than expected and the world heads into the second year of deficit in the sweetener.
According to Cepea/Esalq, a University of Sao Paulo price discovery center, the bag of crystal sugar rose 0.3 percent from Tuesday's value of 100.37, the previous record and the first time a bag surpassed the 100-real mark since the institution started to collect prices in May, 2003. The price move underscores a situation of a global shortage in the sweetener after weather problems reduced output in important global producers last year.
"In addition to mills' firm stance on prices, prospects for a smaller supply of sugar demand the global market continue to give support to prices in Brazil," Cepea/Esalq said in a note earlier this week. Sugar analysts Datagro projects a global sugar supply deficit of 8.26 million tonnes in the 2016/17 crop year.
The prices on the domestic sugar market are provoking a few cancellations of export deals, an operation known in the market as "washouts." Some mills are paying the costs to cancel contracts with trading houses, opting instead to sell the sugar locally.
According to a senior trader at a leading international sugar trading firm operating in Sao Paulo, some 300,000 tonnes of export deals had been canceled so far in the current crop in Brazil's center-south due to companies finding better deals on the local market.
But the trader, who asked not to be named because he was not authorized to speak publicly on the subject, did not consider the amount relevant considering the exportable volume expected from Brazil's center-south this year near 25 million tonnes.
"This (washouts) is something that happens every year. Sometimes more, sometimes less, and for different reasons," he said. Brazil's center-south cane harvest has turned out to be smaller than initially expected, as lower agricultural yields reduced the crush from initial estimates of nearly 630 million tonnes to around 600 million tonnes. With less cane to process and drier weather most of the season, mills will end harvest early, around mid-November, which could increase the tightness during a longer inter-crop period from December to April.