Sugar futures tumbled further, under pressure from a slightly bigger than expected cane crush, and technical selling.
Data from Unica, the Brazilian cane body, dashed ideas that the that rain severely hampered the harvest in the country’s Centre South cane belt.
March raw sugar futures were down 3.6%, at 20.39 cents a pound, after breaking through the 100-day moving average in the previous session.
The Brazilian Centre South cane crush totalled 31.75m tonnes.
This is down some 12% year on year, and down 3% from the second half of September.
But despite the reduction, the result was still towards the upper end of forecasts, as rain disruption was expected.
“Some are expecting a cane crush number below 30m tonnes,” said Nick Penney, at Sucden Financial, before the release of the data.
Sugar production was reported at 2.25m tonnes during the first half of October.
“We even less sugar cane to be harvested in the first half of November,” said Carlos Mera, commodities analyst at Rabobank.
Early end to season
Mills in the region are closing down rapidly, due to lower cane ability, with more closures expected
“By the end of the second half of October, 55 production units had closed the 2016-2017 harvest, which is higher than the 18 mills closed in the same period last year,” said Unica, noting that 23 mills were closed in the last half of October.
“For the first half of November, [a further] 40 mills are expected to close milling,” Unica said.
Of the 55 mills closed so far this season, there was an average year-on-year reduction of some 12%, indicating less cane available.
Drop-off in November
Mr Mera said the end of the harvest was coming earlier because “this season the sugarcane harvest stared very early”.
He expected that “even less sugar cane to be harvested in the first half of November”.
But he added that the despite less cane availability, and worsening weather, “I don’t think we’re going to see a sudden end to the milling season”.
Looking forward to the next season, Mr Mera said “we’re looking at lower renovation” which means that there will be less replanting of cane, and therefore the average age of cane will be higher next year, which can reduce yields.
But Mr Mera suggested that the volume of cane being diverted to sugar would increase next year, after investment by mills to increase their sugar production.
White markets tumble
Sugar markets are also digesting a very large deliver against the expiring December white sugar contract.
The delivery, of 535,850 tonnes of white sugar, was the largest in more than nine years. Most of that volume was delivered the port of Jebel Ali in the United Arab Emirates.
Given the sharp drop in prices for the expiring contract in the previous session, the action suggest that there are plenty of sellers ready to offload their product onto the market, suggesting a dearth of other options.
March white sugar futures were down or 2.5%, at 540.80 a tonne.
(Source – http://www.agrimoney.com/news/sugar-futures-slump-on-brazilian-cane-crushing-data–10164.html)