It’s a story depressingly familiar to to sugar futures brokers – bad weather in Brazil means the key ports in Santos and Paranagua lock up, raising the price of sugar as the supplies of the sweetener get tighter. Heavy rains and growing container traffic mean that vessels trying to load this month will have to wait 29 days before they load sugar – a record delay, Bloomberg News reports.
Low inventories around the world and the infrastructure woes of Brazil’s ports helped push the price of white refined sugar futures for December delivery up nearly 2 percent to $579.30 per ton on the NYSE Liffe exchange in London. Raw sugar futures for delivery next month gained 0.3 percent to 22.49 cents per pound on the IntercontinentalExchange in New York.
The main cause of the loading delay is an increase in the amount of ships seeking to load loose bags, rather than bulk sugar, and the heavy rains. It takes nearly three times longer to load a ship with loose bags of sugar, reports Businessweek/Bloomberg, and high levels of humidity damage or spoil the product.
“The backlog is worse than I had expected for September,” Nicolle Alves de Castro, an associate at the research firm Santos Associados Consultoria Ltdam told the magazine. “People will have to be really patient.”
“No port in the world is prepared for demand peaks like this, which are totally atypical,” said the port of Santos – the largest in Brazil – in a statement.
The ship traffic queued up to enter Brazil’s seven main ports has fluctuated this year, but has been generally high; yesterday, there were 104 vessels waiting to load, up from 72 a year ago. In August, the queue hit a backlog of 135 ships.
Brazil alone accounts for over half of the world’s sugar exports.
Other soft futures gained as well – arabica coffee futures for December delivery gained 0.5 percent to 191.7 cents per pound on the IntercontinentalExchange, while Robusta coffee futures rose 0.6 percent to $1,601 per ton on the Liffe.
Number 2 cotton futures for December delivery rose 1.3 percent to $91.65.
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