Rain delays to Brazil's sugar harvest could mean that a long expected global deficit finally bites. Despite forecasts by several analysts for a substantial global sugar deficit in 2015/16, immediate supplies have been plentiful due to a flying start to the harvest in centre-south Brazil in excellent weather.
Sergey Gudoshnikov, a senior economist with the International Sugar Organization (ISO), said production in centre-south Brazil in the six weeks until May 15 was double that of the same period a year ago.
Brazil's main cane belt produced 2.06 million tonnes of sugar in the first half of May, versus 1.81 million tonnes in late April, according to cane industry association Unica. Output was 68 percent above the same time last year.
Front month ICE raw sugar prices rose to a 23-month high of 18.02 cents a lb on Thursday, reflecting market expectations of a global deficit in 2015/16 after several years of surpluses.
Earlier this month, the London-based ISO forecast a global sugar deficit of about 3.8 million tonnes in 2016/17, compared with a deficit of 6.65 million tonnes in 2015/16.
A sense of the impending deficit has intensified as increased rains in the second half of May and forecasts for heavy rainfall in the first half of June were expected to delay the cane crush in centre-south Brazil.
Strong competition between loading of sugar and soybeans at Brazilian ports, combined with the rains, is contributing to long vessel line-ups.
"Rain continues to fall in Sao Paulo and is expected to continue on until early next week," said Michael McDougall, director, commodities agency, of Societe Generale.
"That is causing a slowdown in port loading that began last month." Some market participants estimate mills will lose six to eight crushing days in the first half of June, compared to 3.5 days in late May.
Gudoshnikov said, "The trade balance is so tight that any disruptions may influence market sentiment."