Sugar Erases Gains in New York After Minor Damage at Brazil Port

Aug 04, 2014 2:57 pm ET

Aug. 4 (Bloomberg) -- Raw sugar erased gains in New York after a warehouse fire caused only minor damage in Brazil, the world’s largest exporter of the sweetener.

About 15,000 metric tons of sugar were destroyed at the Port of Santos warehouse owned by Cosan SA Industria e Comercio’s Rumo logistics unit, the company said by e-mail. Brazil will produce 36.8 million tons in the season that started in May, according to the U.S. Department of Agriculture. Futures rose as much as 5.6 percent before details of the damage were known.

“15,000 tons is not even half what a vessel carries,” Claudiu Covrig, an analyst at Kingsman SA in Lausanne, Switzerland, said by telephone. “We still have an important surplus of sugar in the world market and more is to come from Brazil.”

On ICE Futures U.S., raw sugar for October delivery slid 0.2 percent to close at 16.32 cents a pound at 1 p.m. in New York.

The fire started at 4:30 p.m. yesterday at warehouse 10 in the port of Santos, the biggest in Brazil, and was controlled by 9 p.m., Cosan said in the e-mail. No workers were injured.

Prices slid 0.5 percent in 2014 after falling 49 percent in the past three years on a global glut.

In October, a fire at Copersucar SA’s terminal in Santos destroyed 180,000 tons of sugar and affected all of the company’s six warehouses, sending prices to a one-year high. On Feb. 10, a fire at Cosan’s warehouse 26 caused no damage. Prices jumped 1.3 percent that day only to erase all of the gains on Feb. 11.

Brazil’s sugar production in the Center South, the region that accounts for about 90 percent of the country’s output, was 12.9 million tons as of July 16, 13 percent higher than a year earlier, according to industry group Unica.

--With assistance from Fareeha Ali in Chicago.