Up to 110 ships were waiting to load sugar at the ports of Santos and Paranagua on several occasions during July and August this year, three times the usual number.
 Ships had to wait about 30 days to load their cargoes, compared with the normal 10–15 days and with demurrage charges costing $15,000 to $20,000 per day, depending on tonnage, the prejudice to trading companies will be substantial.
The crunch was mainly because importers in more than a dozen countries, who suspended sugar purchases when prices peaked at their highest for 30 years in late January, preferred to use up stocks and wait for prices to fall.
But as stocks ran out, many importers were obliged to seek a lot of sugar all of a sudden. Prices did in fact fall from the record $28 cents a pound of January to about half that in May.
But with hundreds of ships converging on Brazil, the only country which will have much to export until October, prices subsequently shot back up to $20 cents per pound. The eight terminals equipped to load sugar at Santos can together handle about 85,000 tonnes a day, if all goes well. However, wet weather interrupted loading for almost a week during July and for several days in early August as well, so this was not achieved.
In the end little more than the record of September last year, when 2.6mt (million tonnes) was loaded, was shipped in July.
Ideal weather in the fields since harvesting began on 1 April this year, meant that 255mt of cane had been cut and processed into sugar or ethanol fuel by the middle of July. This was 51mt more than by the same time in 2009, when rains interrupted harvesting frequently. With the international market for ethanol subdued, mills have made as much of the cane as possible into sugar this year. But the ability to switch is limited, notably because most of the 200 mills built in the past five years are only able to make ethanol, seen as the most attractive alternative when they were planned.
Even so, 14mt of sugar had been made in the first four and a half months of harvesting, and 10mt of that is available for export.
When harvesting began, it was anticipated that up to 3mt more sugar would be exported this year than the 24.3mt of 2009.
But although the dry weather in almost all areas where cane is grown in the south east has allowed harvesting to proceed at a cracking pace, it was not good news for the cane harvested at the end of last year. This cane has been developing extremely slowly, with the result that the amount of sugar each tonne of this cane contains, will be far less than the record 140kg per tonne of that cut during July and August.
The half a dozen countries which have emerged as ‘toll’ refiners in recent years, notably Dubai, Saudi Arabia, Nigeria and Morocco, get their ‘high polarity’ raw sugar, the cheapest and easiest to refine, from Brazil. Until now they have not had to bother with holding substantial stocks and many of the ships waiting to load in the past few weeks, have been from these countries.
Other important importers, such as Russia, Pakistan, China and the US, also allowed stocks to fall dangerously and have ships in the queue as well.
With sugar prices up to 50% higher at the end of July than they were two months previously, not surprisingly, many Brazilian mills have been in no hurry to sell.
Particularly as it now seems that up to 2mt less sugar may be produced in the last few months of this year as was previously expected.
It is almost impossible to predict at this stage what will happen to prices and supply, as so many variables are involved. The dry weather in Russia, for example, will cut the beet crop there and force Russia to import more than was expected.
Whatever happens, exports of raw and refined sugar will earn Brazil at least $12 billion dollars this year, compared with the $8.5 billion of 2009.
This being the case, the stronger mills are expected to leave the immature cane uncut at the end of the year, and allow it to take advantage of the summer rains to mature fully, and yield more in 2011.
Although this year is proving very favourable for the sugar industry, many mills are still recovering from two poor years of low prices, at a time when they had to foot the bill for the massive expansion and new buildings.
Because of this, many mills have cut back on plantation care, while little brand new cane has been planted in the past few months.
Because of this, few analysts suggest that much more cane will be available for cutting next year than this. It would also be very surprising if the weather is as favourable for harvesting in 2011 as it has proved to be this year.
Patrick Knight