Brazilian Raw Sugar Discount Widens on Harvest, Indian Shipments

Buyers of raw sugar from Brazil, the world’s top producer, are getting a bigger discount for their sweetener as harvesting advances and competition with India’s exports increases, according to Swiss Sugar Brokers.

Brazilian sugar for loading this month at the port of Santos, the country’s biggest, was offered at a discount of 0.6 cent a pound to the price of the March futures on ICE Futures U.S. in New York last week, the Rolle, Switzerland-based broker said in a report on 2 December. That compares with a discount of 0.5 cent on Nov. 10. The sweetener traded at 0.75 cent a pound under the futures last week, the broker said.

Mills in the center south, Brazil’s main growing region, produced 13 percent more sugar in the first half of November than a year earlier, industry group Unica said last week. That signals this year’s crop will “have a long tail” and final output will surpass the expected 34 million metric tons, according to Marex Spectron Group. India, the second-biggest producer, will export as much as 3 million tons of sugar in the 2013-14 season started there Oct. 1, the Indian Sugar Mills Association said.

There’s a “general consensus that sugar production will end over 34 million tons,” Naim Beydoun, a broker at Swiss Sugar Brokers, said in the report, referring to output in Brazil’s center south. India probably sold about 600,000 tons of raw sugar for exports and that had an impact on the Brazilian cash values, he said.

Raw sugar futures traded in New York, down 13 percent this year, are heading for a third annual decline, the longest slump since 1992. Global supplies will beat demand by 4.73 million tons in the 12 months started Oct. 1, a fourth year of surplus, according to the London-based International Sugar Organization. Excess supplies were a record 10.6 million tons in 2012-13.

Brazilian raw sugar for loading in January at the port of Santos was at a discount of 0.4 cent to 0.5 cent a pound to the futures, data from Swiss Sugar Brokers showed. That compares with a discount of 0.25 cent to 0.5 cent on Nov. 10. The sweetener for February traded at a discount of 0.25 cents. Sales were “in line with the progress of the crop,” Beydoun said.