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Sugar Futures

April 23rd, 2014

Sugar output in Brazil’s Center South, the world’s largest producing region, will decline 5.2 percent this season after crops were hurt by drought.

Mills will produce 32.5 million metric tons of the sweetener in the current 2014-15 harvest, down from 34.3 million in the previous season, Brazilian sugar industry group Unica said in a statement distributed in Sao Paulo today.

Crops in the Center South, where most of Brazil’s sugar and ethanol are produced, faced the driest and hottest summer in 70 years, according to Somar Meteorologia.

Sugar-cane production will drop to 580 million tons from 596.9 million last crop, Unica said.

Ethanol output will rise to 25.9 billion liters (6.8 billion gallons) from 25.6 billion last harvest as mills divert more of their cane to fuel production as demand for sweetener wanes, the group said. Mills will use 56.4 percent of their sugar cane to produce ethanol.

The harm from adverse weather will be partly offset by a bigger harvesting area, Unica said.

The average concentration of sucrose, the substance that’s processed into sugar and ethanol, will rise to 135 kilograms (298 pounds) per ton of cane from 133.3 kilograms a ton last season.

The government said April 10 that sugar production in the Center South will climb 4.4 percent to 35.9 million tons this season, while ethanol output will rise 1.2 percent to 26.3 billion liters.

- Gerson Freitas Jr. in São Paulo at Bloomberg.