Call on cane from ethanol ‘to boost sugar prices’
The switch by Brazilian mill from turning cane into ethanol rather than sugar identified earlier this week may set a trend, Macquarie said, forecasting a recovery in prices of the sweetener to levels not seen for six months.
Macquarie acknowledged the pressure on sugar prices from weak import demand as strong crops in China and Russia curb their need for foreign supplies.
And it raised again its forecast for Brazilian Centre South cane production, to 515m tonnes, in 2102-13, flagging the extent to which mills had recovered their pace of crushing – which hit a record in August – after a rain-delayed start to the season.
The cane harvest to could rise to 550m tonnes in 2013-14, thanks to the long-term boost to cane yields from the rains, besides the impact of replanting ageing, low-yielding crops, the bank said.
‘More diversion towards ethanol’
However, even while trimming its forecast for New York sugar prices in early 2013, its forecasts factored in a return to 24.5 cents a pound by late next year as ethanol makes a bigger call on Brazil Centre South cane.