Analysts expected a significant decline in Brazil's output of sugar due to rainy weather across the country. However, the world's number one sugar producer has continued to harvest the crop well ahead of last year's pace during the first half of July.
One of the worst droughts in ten years hit the top-growing regions from January through April. Now ongoing dry conditions are making it easier for growers to harvest cane, increasing the early harvest totals. This also means that Brazil's sugar harvest will soon fall short, reports the Wall Street Journal.
"We're easily a whole cent away from where the sugar should be," said Hector Galvan, senior market strategist at RJO Futures in Chicago, according to the Wall Street Journal. "Easily by the time we get to mid-, late-August, we'll see the longer-term turn around." Galvan predicts that the October contract will trade above 18 cents a pound by the end of the summer.
The industry association Unica said in its latest weekly report that mills in the main center-south cane region produced 2.55 million tons of the sweetener from July 1 to 15. This is just slightly off output of 2.58 million tons in the second half of June, reports Reuters. The report also showed that sugar for delivery in September on ICE Futures U.S. rose 0.9 percent at 17.11 cents a pound.
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