Sugar rose to the highest in almost two years as heavy rainfall disrupted loadings at ports in Brazil and caused a slowdown in the harvest at a time of high demand.
The port of Santos had its wettest May since at least 2013 and vessels are now waiting to load 1.9 million metric tons of sugar, according to shipping agencies Alphamar Agencia Maritima and Williams Servicos Maritimos Ltda. Above-average rainfall will intensify over the next five days in Brazil’s main-producing region, said MDA Weather Services.
"The wet conditions in about half of the southern Brazilian cane region is no doubt having an impact," Tobin Gorey, a strategist at Commonwealth Bank of Australia, said in an e-mailed report Friday. "Sugar production will be down in the second half of May. And now, the wet weather looks set to continue for long enough that mean these delays might extend into mid‑June."
Sugar Rally
Raw sugar for July delivery rose as much as 1.9 percent to 18.42 cents a pound on the ICE Futures U.S. exchange in New York, the highest since June 2014. In London, the white variety for August rose as much as 1.3 percent to $501.30 a ton, the highest since October 2013.
Rain fell for just over seven days at the port of Santos in May, more than double a year earlier and compared with about one day in April, Alphamar said in a report e-mailed Thursday. Waiting time at the Rumo terminal in Santos was 15 days and it was as long as 19 days at Pasa in the port of Paranagua, Williams data on Wednesday showed.
Sugar shipments were suspended for two-and-a-half days this week, Copersucar SA Chief Executive Officer Paulo Roberto de Souza said Thursday. The rain also hampered cane crushing in the center south in the second half of May, said Antonio de Padua Rodrigues, technical director at industry group Unica.
Potential harvest delays have erased the discount between July and October futures. It also added concern that traders may try to take delivery through the exchange at a time ports are congested. The July contract expires at the end of month in New York.
"The July contract delivery window looked like it would have plenty of sugar about three weeks ago," Gorey said. "The wet weather means that is now unlikely to be the case so market pricing is changing to reflect that."
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