The main centre-south sugar growing region of Brazil will process an all-time high 500 million tonnes of sugarcane in 2008, 16 percent more than the previous year, trade house Czarnikow said on Monday.
"Our analysis indicates that this throughput figure is constrained by the industry's capacity to process rather than the physical availability of cane, which means that the weather will continue to play a critical role in the size of production," it said in its latest monthly report.
"However, weather conditions during the start of the current harvest cycle have not been ideal, resulting in poor progress and lower sucrose yields." The centre/south of Brazil is the world's largest cane growing region and Brazil the biggest sugar export origin.The sugar market has become increasingly dependent on Brazil to supply the lion's share of global raw sugar.
"While the threat of weather disruption and potential crop damage has long been recognised as the major variable in the production outlook, this year's crop is also being affected by a relatively new development: limited flexibility within the industry," Czarnikow said. "As a consequence, the industry is producing less ethanol (biofuel) than it would like and more sugar even though the production weighting to ethanol is currently approaching 60 percent."