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Brazil Mills to Turn More Cane Into Sugar as Dryness Hurts Crops

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Dec. 1 (Bloomberg) -- Sugar mills in Brazil’s Center South, the world’s largest-producing region, will turn more of their cane into the sweetener this year after below-average rainfall damaged the crop, an industry group said.

Mills will turn 44.5 percent of the cane into sugar, up from an August estimate of 43.9 percent, Antonio de Padua, technical director at industry association Unica, said in a telephone interview from Sao Paulo today. The rest will be used to produce ethanol.

The sugar-cane harvest in the region will fall short of the 570.2 million tons estimated by Unica on Aug. 27 because of a lack of rainfall, Padua said. Producers in Brazil are shifting production away from ethanol after sugar prices touched a 29-year high on Nov. 9.

“Mills are slowing down crushing in order to extract the most sugar they can,” he said. “Prices for March delivery are quite attractive.”

Sugar prices doubled since mid-May on concern that exports from producers such as India may miss expectations. Prices for March delivery rose 0.92 cent, or 3.3 percent, at 28.47 cents a pound at 12:01 p.m. New York time.

Sugar output in the Center South, which accounts for about 90 percent of the country’s output, is estimated in the “best-case scenario” at 33.7 million metric tons, Padua said.

To contact the reporter on this story: Lucia Kassai in Sao Paulo at lkassai@bloomberg.net.

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net.