Brazil’s sugar industry is benefiting greatly from the fact that
output in India fell from 31mt (million tonnes) in 2006/07 to
about 15mt last year.
This has resulted in a world deficit of about 7mt, which has
caused the world sugar price to rise to US$0.25 cents a pound,
the highest for 30 years.
Brazil exported 25mt of sugar last year, 5.5mt more than in
2008.  This earned $7.7 billions, $2.2 billions or 30% more than in
A total of 23mt of sugar is consumed in India every year, and
the collapse in output there meant the country switched from
exporting about 7mt to importing almost as much.
India became Brazils largest market last year, when it bought
about 5mt, compared with virtually nothing in 2008.
Several countries in Asia and the Middle East which normally
get most of their needs from India, bought Brazilian sugar instead
last year.
Russia used to be the leading market for Brazilian sugar, but
while more than 5mt were sold to Russia in 2008, only three
million went there last year.
Two million tonnes of sugar were shipped each month during
2009, half a million tonnes more each month as in 2008.  Three
quarters went via Santos, where three sugar loading complexes
were built ten years ago.  Santos operated at full capacity all last
year and in September, when 2.6mt were shipped, the rains were
especially heavy and a queue of 25 vessels built.
With four times as much rain as usual in the second half of
the harvest, 2009/10 was a difficult year for Brazil’s sugar
Rather than each tonne of cane containing about 145kg of
sugar equivalent, as it usually does, a tonne contained only 131kg
of sugar.  So although 32mt more cane was cut in 2009 as in the
previous year, less sucrose was produced.
Spurred by the high prices, mills preferred making sugar to
ethanol fuel in 2009.
So while 10% more sugar was made, 4% less ethanol was
Although 5.5mt more sugar was exported in 2009 as in the
previous year, only 2.25mt more was actually made.  Stocks were
drawn down and it also appears that estimates regarding how
much sugar is consumed in Brazil each year have been
exaggerated.  Rather than the 12mt estimated by the USDA, the
industries trade association, Unica, claims that no more than
10mt is used each year, 50kg per capita, rather than a world
record 60kg.
Because the weather was so wet, less sugar was made than
expected.  With companies unable to fulfil export contracts,
washouts will be subject to penalties.
Nobody really knows how long the sugar prices will remain at
the present high of about 25 cents per pound.
Growing sugar is extremely attractive at the moment, so
farmers are rushing to plant more.  The key is India, but few
expect more than 30mt being produced there until 2011.  Before
India can export much, domestic stocks will have to be re-built.
About 100 new mills have started up in the past four years in
Brazil,  most designed to make only ethanol, as it was thought
markets would easily be found for the fuel.
Demand for sugar usually grows by only about 2% a year.
However, did not turn out that way and partly because of the
economic crisis, less ethanol was exported in 2009 as in 2008.
 The surplus was sold at a loss in Brazil last year.
Many mills which can now only make ethanol are now rushing
to install sugar refining facilities and about 9% more cane will be
available 2010/11, 50mt more than in 2009.  Brazil should
produce about 3mt more sugar 2010/11 than it has in the past
12 months.
A decade ago, about 50% more raw sugar was exported each
year than the refined type. But since them, many toll refineries
have been built in the Middle East, North Africa and Africa itself,
where energy is cheap.  So while two and a half times as much
raw sugar is now exported each year than a decade ago, only
50% more refined sugar is now shipped.
-Patrick Knight