Exporters are offering deep discounts on centre-south Brazilian raw sugar, with global supplies plentiful and a new harvest in the world’s top producer just weeks away.

Trade sources quoted offers of prompt centre-south Brazilian raw sugar at 10 points below ICE futures, signalling abundant availability.

A senior European trade source said supplies of the old Brazilian crop in the inter-harvest period in centre-south Brazil had exceeded expectations, even before the new harvest gathers pace in coming months.

“Supplies are heavier than expected at this time of year,” the source said.

“There are more old-crop Brazilian raws around than was previously expected, and as we move towards the peak of the new harvest in May and June these supplies will get heavier.”

Trade sources also said that the cane crush in Thailand, the world’s number 2 exporter after Brazil, would reach an all-time high in the 2013/14 season.

Some Central American producers and India, where the government provided a package of production incentives, have also boosted offerings of raw sugar on the world market before the start of Brazil’s harvest.

In addition, dealers said Mexican sugar was moving into markets such as Morocco and Australia, muscling out Brazilian supplies.

Meanwhile, demand from China, a major buyer of Brazilian and Central American raw sugar at this time last year, has been subdued after it built up huge stocks during a period of falling prices over the past couple of years.

“There is a lack of end-destination demand,” said Maria Nunez, a sugar analyst with data provider Platts.

“We don’t see a single vessel in the lineup (at ports) going from Guatemala to China.”


ICE raw sugar futures traded near three-week lows on Tuesday. The market had rallied to four-month highs on March 6 in March on concerns over crop damage from a drought in Brazil, and traders said that rally had been overdone.

Broker Marex Spectron said the world was experiencing an oversupply of both raw and white sugar.

“It is proved by big discounts for spot Western Hemisphere raws (and tiny premiums for Thai raws, which should normally be at big geographical premiums, proving that Thailand is where the surplus is),” Marex said in its latest weekly report.

The European trade source estimated the Thai cane crush, which is due to finish in April, at 105-108 million tonnes, a record high, and said Thai exporters were holding back due to the low local premiums, so stocks were high.

But the International Sugar Organization has slightly reduced its forecast for a projected global sugar surplus in 2013/14 to 4.2 million tonnes from 4.7 million, including some months of the Brazil drought.

For the next 2014/15 season, Brazil’s main centre-south sugarcane output will fall to 575 million tonnes from last year’s 596 million due to the poor weather including drought and frost, sugar and ethanol analyst F.O. Licht said on Monday. (editing by Jane Baird)