Raw sugar futures fell back after the tail to Brazil’s production season was shown to be wagging even faster than investors had expected, accelerated by a strong cane volumes and quality.

Cane mills in Brazil’s Centre South region, which is responsible for more than 90% of domestic sugar output, produced 1.03m tonnes of sugar in the second half of last month – more than five times the 163,000 tonnes reported for the same period of 2021.

The volume, for a period in which mills are typically winding down for a seasonal lull before opening when the next crushing season opens in April, also came in 100,000 tonnes of market expectations, as measured by an S&P Global Commodity Insights survey of investors, and was the fastest for the period in six years.

New York raw sugar futures for March 2023, which had traded higher earlier in the session, stood down 1.1% at 19.38 cents a pound in late deals.

Ahead year on year

The extent of the sugar output reflected largely a surge in cane crushing volumes, which more than tripled year on year to 16.23m tonnes, in line with expectations.

This took the cumulative total for 2022-23 to 531.9m tonnes – exceeding last season’s pace for the first time.

Mills started this season’s crush slowly, to allow cane more time to recover from drought and frost damage which dogged last season’s harvest too.

The patience has been rewarded by cane which last month achieved a yield of 67.9 tonnes per hectare, up by 4.6m tonnes per hectare year on year, analysis by the CTC sugarcane technology centre shows.

Furthermore, the cane has started showing improved quality too, containing 139.9 kilogrammes of sugars per tonne of crop in the second half of last month, up by 5.7 kilogrammes year on year.

Mills stay open

Sugar output was also buoyed by mills’ use of an enhanced proportion of cane for making the sweetener, rather than ethanol.

Sugar’s take in the last half of November, at 47.6%, was up from 32.9% a year before, and beat too market expectations of 45.5%, as measured by the S&P Global poll, and reflecting market incentives.

Making hydrous ethanol, as of Friday, offered mills only 15.10 cents per pound in sugar terms, according to Czarnikow.

Investors will now attempt to deduce how much more sugar the Centre South will produce this season, reflecting too the number of mills that remain open.

While 56 mills closed in the second half of November, and Unica forecast a further 23 finishing in the first half of this month, that would still leave 61 mills working.

Last year, all but 27 mills had closed by the end of November.

S&P Global forecast, ahead of Monday’s data, that Centre South mills would produce 32.7m-32.9m tonnes of sugar for the full 2022-23, up from 32.1m tonnes last season.