SAO PAULO/NEW YORK- Sugar prices hit their highest level in more than four years after a report confirmed damage to sugarcane crops in the world’s larger producer Brazil from unusually harsh frosts in June and July.
Sugar production in Brazil’s center-south region fell by 11 percent in the second half of July to 3 million tons, industry group Unica said, more than expected. Unica added that the three waves of frosts that hit the agricultural areas had further damaged crops already hurt by the worst drought in 90 years.
Market participants were already expecting lower numbers for the second half of July due to the frosts, but the Unica figures were below estimates. Sugar futures on New York’s ICE exchange, rose nearly 7 percent on Tuesday in response.
Unica said sugarcane produced per hectare fell 17.9 percent in July when compared to the year-earlier period, as the frosts meant mills had to cut cane before the ideal harvesting time.
Cane crush fell 8 percent from the same period a year ago, to 46.69 million tons.
“Both agricultural yields and the quality of the cane have been hurt by the frosts,” Unica’s technical director Antonio de Padua Rodrigues said.
The sugar season in Brazil, a country that supplies around 40 percent of the global sugar trade, could end much earlier than usual, causing tighter global supplies. – Reuters
