BRAZIL – Brazilian sugar exports will hit a record high, boosted by increased production expectations, and despite a slump in shipments to China after Beijing raised tariffs on imports of the sweetener.

Brazil’s sugar exports will rise by 1.1m tonnes to 29.6m tonnes in 2017-18, on an April-to-March basis, the US Department of Agriculture’s Brasilia bureau said raising its forecast for shipments.

Exports at that level would be the biggest ever – and more than 900,000 tonnes above the USDA’s official forecast.

And they will be underpinned by sugar output which the bureau pegged at 40.2m tonnes, topping 40m tonnes for the first time, and beating the USDA’s official estimate by 550,000 tonnes.

Sugar vs ethanol

While sticking by estimates of 600m tonnes in sugar cane production from Brazil’s key Centre South region, and of 45m tonnes from the North North East region which produces the rest of the country’s crop, the bureau raised its estimate for the proportion being turned into sugar.

“Based on updated crushing information”, the proportion of cane being processed into sugar, rather than ethanol, was pegged at 48.3%, an upgrade of 0.3 points, and taking the figure further ahead of the 46.9% reported for last season.

The revisions follow reports from industry group Unica of an unexpectedly strong preference among Centre South cane crushers, until last month, for making sugar, although there is now talk that a speedy harvest encouraged by dry weather is seeing some mills run out of cane.

“Some milling groups in Centre South Brazil have signalled an early end to crushing activity for the current crop given that the weather has been largely dry lately and this has meant fewer interruptions to the harvest,” said trading house Sucden Financial.

“Reduced cane availability in Parana and some areas of Sao Paulo states mean that some mills will stop operating by the end of November-beginning of December.”

Changing trade pattern

Brazil’s exports, meanwhile, are being supported by a switch in shipments to the likes of Bangladesh and the Middle East-North Africa, after volumes sent to China plunged 92% to 103,000 tonnes in the first six months of 2017-18, to September, following a tariff shake-up.

Brazilian sugar exports to Bangladesh soared 73% to 1.69m tonnes during the period, making it the top destination, while shipments to Egypt soared sevenfold to 1.12m tonnes, and those to Iraq jumped 54% to 720,682 tonnes.

China in May hiked to 95%, from 50%, its tariff on out-of-quota sugar imports from the likes of Brazil, Thailand and Australia, and launched a clampdown on illegal imports too, in a measure aimed at supporting domestic producers.

A separate report from USDA staff in Beijing stuck by an estimate of China’s overall sugar imports dropping to a five-year low of 4.2m tonnes in 2017-18, on an October-to-September basis.

China maintains a tariff rate of 15% on imports within a quota of 1.945m tonnes a year.

Agri Money