The South American nation is the globe's top producer of the sweetener, particularly the Center South region. This year's production will be 488.5 metric tons of sugar cane for the 2011-2012 crop season, which falls well short of the previous forecast level of 510.2 million metric tons of the sweetener.
The information was released by Unica, the nation's most prominent advocacy for the sugarcane industry, according to MarketWatch. The reduction marks the third time in four months that Unica has pulled down estimates. Wednesday's figures are 4.3 percent lower as compared to forecasts from August, which was the most recent release.
Center South produces almost 90 percent of Brazil's sugarcane and generated 556.95 million metric tons of the soft commodity during the previous harvest, which was 2010-2011. Harvesting the crops typically occurs from April through November.
Thus far this year, Brazilian cane fields have produced roughly 20 percent less of the soft commodity when held against the historical average, according to Unica. Rationale for the reduction includes the long-lasting impact of the 2008 financial crisis as farmers had no choice but to delay investment in replanting fields that were aging and not as productive as they could have been.
The past two winters in the region tended to be drier than typically anticipated while frost touched down on fields during the months of July and August. That inclement weather tended to impair the regular development of sugar plants, which also was negatively impacted by plagues and disease.
"The variables mentioned, plus the expectation that only four mills will start up next year, should result in timid production growth during the 2012-13 harvest," said technical director Antonio De Padua Rodrigues with Unica.
Reuters reports investors sought fertile ground with the weak U.S. economy and the ongoing debt scourge upsetting the apple cart in the euro zone. They also were keeping an eye on high-profile events and meetings, such as the two days that U.S. Federal Reserve policy makers devoted to lifting the U.S. economy on Tuesday and Wedensday of this week.
They also are eyeing closely the Group of 20 meetings scheduled for later this week in Cannes, France, where leaders of the globe's 20 most industrialized nations will convene to discuss the slowing pace of the world's emergence from the Great Recession.
Additional slashes to production are likely in India and in Thailand, the latter of which is suffering from intense flooding that has stretched into the capital city of Bangkok.
At 2 p.m. on Wednesday, sugar futures climbed 0.32 percent, a 0.08 cent lift to 25.42 cents per pound.
Senior trading advisor Hector Galvan with RJO Futures in Chicago said the news about reduced production in Brazil is proving to be beneficial to the sweetener.
"The report out of Brazil is helping support sugar, and I think the market may have gotten a little overdone with all the sell-offs we've had in the past 48 hours," Galvan told the news service from Chicago.
Sugar futures have dropped 9 percent since the middle of last month as a consequence of increasing concerns about the sovereign debt crisis' harmful tendencies. Investors, analysts and observers are concerned about the debt scourge reducing the pace of global development and growth while also eroding demand for commodities, such as sugar.
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