July 23, 2019 / 5:41 PM / 3 months ago

CORRECTED-Brazil sugar lineup plunges as mills cut export business

 (Corrects editing errors throughout)
    By Marcelo Teixeira
    SAO PAULO, July 23 (Reuters) - Brazil's sugar line-up, or
the amount of the sweetener to be loaded at local ports, plunged
in July to the lowest in at least five years, as mills refrain
from sugar export business amid declining global prices.
    According to shipping agency Williams, only 745,000 tonnes
of sugar would be loaded to ships at Brazilian ports around
July, 28% less than in the same period last year, when local
production had already been reduced.
    The volume is 63% smaller than in July 2017, a more normal
year in terms of Brazilian production (see table below).
    At sheds 20 and 21, operated by the world's largest sugar
merchant, Copersucar SA, two ships will load 130,000 tonnes of
soybeans. In the terminal operated by Rumo, a
logistics company controlled by Cosan, which owns 50%
of No. 1 sugar producer Raízen, 10 vessels are expected to load
corn.
    "Global sugar demand didn't fall, it even increased a bit,"
said Julio Maria Borges, a sugar and ethanol consultant at JOB
Economia. "But there is a lot of competition out there. Brazil
mills would have to sell very cheap to make volume, and they
don't wanna do that", he said.
    While raw sugar prices remain near a 10-year low in New
York, the Brazilian currency gained almost 10% against
the dollar since May, as a crucial pension reform passed a first
test in Congress. That further reduced the incentive to export
sugar, Borges said.
    "Many mills continue to focus on ethanol, which generates
quick cash," said João Paulo Botelho, a sugar and ethanol
analyst at broker INTL FCStone. "They will wait for better
prices to make and export sugar," he said.
    Expectations for a higher sugar production mix in the
current Brazilian center-south cane crop did not materialize.
Production mix, or the cane allocation between sugar and ethanol
at plants, remains very similar to last year when mills
earmarked 36% of cane to sugar production, a record-low amount,
with all the rest going to ethanol.
    According to cane industry group Unica, cane allocation for
sugar so far in the season was at only 34.7%.     
        
    BRAZIL SUGAR LINEUP - MID JULY       
 YEAR        TONNES
 2019        745,000
 2018        1,040,000
 2017        2,027,000
 2016        1,511,000
 2015        1,550,000
  Source: Shipping agency Williams 

 (Reporting by Marcelo Teixeira; Editing by Steve Orlofsky)
  
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