The congestion at the main Brazilian ports for agricultural commodities exports could exacerbate a tightness in the global sugar market, according to the co-head of sugar trading for Sucden, Dimitri Varsano.
Speaking to Reuters before the Sugar Dinner in Sao Paulo Thursday night, Varsano said the delays of up to 35 days to load sugar at the Santos port could increase if there are more rains in November, a situation that could drive sugar prices even higher.
The trader said Brazil’s record sugar season will not be enough to offset bad crops elsewhere, citing production problems in India, Thailand, Mexico and the United States, all related to unfavorable weather.
“And if it is not a production deficit, it is a logistical deficit, because Brazil can not export the entire production. It is going to be the case for this year, and it is going to be the case for next year,” Varsano said.
Raw sugar prices in New York’s ICE exchange SBc1 hit a 12-year high this week amid falling crops in several countries and the transportation difficulties in Brazil, which is also exporting record or near-record amounts of soybeans and corn this year.
Varsano said the market has already priced in the current Brazil port situation, but added the problems can worsen if it rains too much in November.
Brazil is entering its rainy season, which usually runs through March or April. Under the El Nino weather pattern, there is a trend for a wetter-than-normal weather in the southern part of the country, where some of the biggest ports are located.
The peak export period for corn and soybeans, however, is ending, meaning that if there is not too much rain, ports could boost sugar loadings.