Datagro Sees Brazil Area’s Sugar Cane Crop Declining in 2014-15

The sugar cane crop in Brazil’s center south, the main growing region of the world’s biggest producer, will decline in the 2014-15 season that starts there in April, according to researcher Datagro Ltd.

Millers in the area will produce 580 million metric tons of cane and make 32.5 million tons of sugar, Plinio Nastari, president of the Barueri-based company said by e-mail today, confirming Datagro’s first estimate for the crop distributed to clients yesterday. Sugar cane output was 596 million tons and production of the sweetener totaled 34.3 million tons from the start of last season through the second-half of January, data from industry group Unica in Sao Paulo shows.

Raw sugar futures traded in New York climbed 10 percent in the past month as dry weather in Brazil threatens to cut output. Brazil’s southeast region, where most of the country’s sugar cane grows, got 75 millimeters (2.9 inches) of rain in January, according to weather forecaster Somar Meteorologia. That compares with a historical average of 275 millimeters.

Crop losses were also forecast by Macquarie Group Ltd., Australia’s biggest investment bank, Pully, Switzerland-based trader Ecom Agroindustrial Corp. and miller Usina Alta Mogiana SA in Sao Joaquim da Barra, Brazil. Cane output in Brazil’s center south will fall to 585 million tons in 2014-15 and sugar production will be 33.8 million tons, Kona Haque, an analyst at Macquarie, said in a report e-mailed today.

‘Serious Concerns’

“The drought has led to serious concerns that the new season’s cane crop may see some yield losses,” Haque said in the report. “Cane development has slowed, and there are reports that some new cane planted last year has shriveled up in the heat and lack of moisture, rather than maturing.”

Dry weather in Brazil will mean that harvesting of this year’s crop in the center south will start later than usual and the sugar concentration in the cane will decline, Nastari said in an interview in Dubai on Feb. 9. The crop will probably be delayed by about two weeks, Luis Roberto Pogetti, chairman of the Sao Paulo-based Copersucar SA, a producers cooperative which has 47 associate mills, said in Dubai on Feb. 10.

Production cuts in Brazil’s center south may help tip the world sugar market into the first shortage in five years. While Kingsman SA, a unit of McGraw Hill Financial Inc.’s Platts, forecast a surplus of 2.1 million tons for the 12 months starting Oct. 1, Macquarie sees a shortage of 1.2 million tons.

Raw sugar futures fell for the past three years on excess supplies, the longest slump in more than two decades. A fourth year of losses would mean the longest decline since at least 1965, exchange data on Bloomberg showed.

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