SAO PAULO: Rains which have already overstayed their welcome in Brazil's cane belt, cutting the amount of sugar that can be packed into the plants' stalks, look set to persist for at least another week, forecaster Somar said on Monday.
Showers halted crushing of the main center-south cane crop in the world's top sugar grower in nearly all producing regions last week, said meteorologist Marco Antonio dos Santos at Somar, a private Sao Paulo-based forecaster, in a weekly crop bulletin.
Although harvesting made good progress over the weekend, sugar content levels in the cane gathered, known in the industry as ATR, were lowered due to the rains of the previous week.
"Although ATR levels had been better than last year, May was an exception, with levels worse than last year," the forecaster said, adding the rain was helpful nonetheless for those who were planting or replanting their cane fields.
He said rains were expected to return this week to all the cane regions, halting crushing again and cutting the ATR even further for the cane due to be harvested in the coming weeks.
The moisture will be good for the cane harvested later in the season, however, helping it recover after drought hurt yields over the past two crops.
BLEAK FORECAST
Deutsche Bank analysts said over the weekend that Brazil's main center-south cane crop would disappoint markets again, putting out between 470 million and 490 million tonnes of cane, after a poor showing of 493 million tonnes in the 2011/12 crop.
That is the lowest in a list of private and public forecasts gathered by Reuters along but matching that of local analysts Canaplan.
Analysts for the bank just returned from a tour of Brazil's center-south, after which they concluded the government's forecast of a 509 million tonne crop would be unattainable.
"With this crushing, sugar production could be lower than 30 million tonnes at the low end and 32 million tonnes at the high end," the report said, adding that this should mark the second consecutive drop in Brazilian cane crushing after 11 years of consistent expansion.
This would also be the lowest output from the center-south since 2007/08, five years back.
The report said the current lack of clarity from the government about regulatory changes in the ethanol sector and regarding its fuel pricing policies, which have a direct impact on the profitability of ethanol sales, would restrict badly needed replanting of aging cane fields.
The shortage of cane versus available crushing capacity would favor mills with their own cane production and weaken those which relied on third party suppliers.
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