The premium buyers are prepared to pay to obtain raw sugar from Brazil, the world’s largest producer, has fallen as much as 66 percent because producers increased offers, according to Swiss Sugar Brokers.
Raw sugar for loading in May at the main ports in the center south, Brazil’s biggest growing region, is offered at a premium of 0.1 cent to 0.15 cent a pound above the price of the May contract on ICE Futures U.S. in New York, Naim Beydoun, a broker at the Rolle, Switzerland-based company, said by phone today. That compares with 0.3 cent a pound on April 10.
“Producers in Brazil did not sell too much May sugar forward because they were afraid of a repeat of last year,” Beydoun said, referring to delays to loading sugar at the country’s ports. “Now, suddenly, it seems that the sugar is flowing and they are offering new sugar into the market.”
Vessels were waiting more than 50 days at some terminals in May last year to load as output fell. Cane production in the center south fell for the first time in a decade in the 2011-12 season, data from industry group Unica showed.
Sugar has fallen 11 percent in New York in the past month as supplies outpaced demand. Production will be 6 million metric tons higher than usage in the current season, according to Zug, Switzerland-based Tiberius Asset Management AG.
“There is no demand on raw sugar and small demand on white sugar, but this will not be enough to give a boost to the market,” Beydoun said. “The whole complex, raws and white, will be driven by the weakness in New York.”
Containers of crystal sugar from Brazil for April and May shipment were offered at a premium of 1.05 cents a pound on April 15, up from 1.10 cents a pound five days earlier, data from the broker show.
The country’s crystal sugar faces competition from white, or refined, sugar from Thailand, especially in West Africa, Beydoun said. Thailand is the world’s second-biggest shipper. Production there will rise to a record 10.5 million tons this season, according to the Office of the Cane & Sugar Board.
To contact the reporter on this story: Isis Almeida in London at Ialmeida3@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at Ccarpenter2@bloomberg.net.