Brazil’s Domestic Sugar Sales Seen More Profitable Than Exports

Sugar sales in the domestic market in Brazil, the world’s largest producer, were more profitable than exports last week for the first time in more than two months, according to Cepea, a University of Sao Paulo research group.

Local sales were on average 2.7 percent more profitable than exports in the week ended Aug. 10 as international prices dropped, Cepea said in a report yesterday. Exports were 0.4 percent more profitable than shipping the sweetener a week earlier and 5.3 percent more advantageous in the week ended July 27, Cepea data showed. Raw sugar traded in New York slid 5.7 percent last week as the harvest in Brazil gathered pace.

“After more than two months with exports showing more advantage than the domestic market, Cepea figures indicate that this scenario inverted last week,” Heloisa Lee Burnquist, an analyst at Cepea, said in the report.

Sugar cane processing in Brazil’s center south, the country’s main growing region, rose 11 percent to 46.3 million tons in the second half of July, data from industry group Unica showed. Above-average rains in May and June had delayed the progress of the 2012-13 crop under way there.

“The decrease of international prices continues to be related to advances of the harvesting and the crushing of sugar cane in Brazil,” Burnquist said. “Due to favorable weather conditions in July, producing companies operated without interruptions.”

Crystal Sugar

Local prices for crystal sugar slid 1.9 percent to 57.91 reais ($28.72) a 50 kilogram (110 pound) bag last week, Cepea data showed. Mills in Sao Paulo, the biggest sweetener producing state, are prioritizing delivery to pre-signed contracts instead of selling in the open market, Cepea said.

Sugar sales in the domestic market were 41 percent more profitable than anhydrous ethanol, the kind used to blend into gasoline, and 61 percent more advantageous than hydrous ethanol, used in flex-fuel cars, it said. Both the sweetener and the biofuel are made from raw material sugar cane.

Crystal sugar, used in Brazil’s domestic market, has an International Commission for Uniform Methods of Sugar Analysis level of between 130 and 180, according to the Cepea website. A lower level corresponds to a higher degree of whiteness. The refined variety traded on NYSE Liffe calls for an ICUMSA level of 45.

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