According to foreign media reports, Brazil has been hit by three rare frosts in June and July this year, with temperatures falling to freezing for several days, affecting the growth of crops such as corn, coffee and sugar cane. The frosts, which came after the country's worst drought in decades, also hit the country's agriculture hard.
Brokerage firm StoneX lowered its forecast for sugar production in south-central Brazil to 34.6 million tons, down from its May forecast of 35.7 million tons and 10 percent below last season's record 38.4 million tons.
Asian commodities trader Wilmar, one of the world's largest sugar traders, sharply lowered its estimate for Brazilian sugar production on Tuesday, saying Brazilian sugar production is expected to be only about 28 million tons in 2021/22 due to extensive damage to sugarcane fields.
Raw sugar futures prices in New York were near their highest level in four years last week due to expected crop losses.
Karim Salamon, head of Wilmar Sugar's analysis department, said that south-central Brazil crushed 605 million tons of sugarcane last season, but the widespread frosts will lead to a decline in agricultural yields, resulting in a drop in sugarcane crushing volume to about 490 million to 500 million tons.
StoneX also expects total sugarcane crush to fall, but not by much, at an estimated 541 million tons, down from a previous estimate of 568 million tons. The broker said it would not rule out further downgrades to its forecast, as the full extent of damage to crops from the three waves of frosts that hit Brazil is still being assessed.
StoneX now expects the global sugar supply balance to shift to a 1 million ton shortfall in 2021/22, from a 1.7 million ton surplus projected in May.
Brazil's next crushing season may also be affected, Toyo International said. "Immature cane stems are vulnerable to frost damage," Salamon said. "Besides, the recent drought has reduced the amount of replanting."