The Brazilian government on Thursday lowered its forecast for the country's cane crop this April-March season, while holding stable the view of its expected sugar output, which accounts for half of global exports of the sweetener.

The 2012/13 sugarcane crop is seen at 596.6 million tonnes, down 1 percent from the April estimate of 602.18 million tonnes, according to the second estimate of the crop this season from the agriculture ministry's supply agency Conab.
The crop that is now harvesting in the main center-south region would rise 6.5 percent, if confirmed, from last year's revised-down 560.36-million-tonne output, the agency added.

Despite the drop in the cane crop estimate from April, sugar output -- now forecast at 38.99 million tonnes -- is virtually stable with the 38.85 million tonnes forecast four months ago.

If confirmed, this year's sugar output would be 8.4 percent greater than last year's 35.97-million-tonne output. Conab put the main center-south cane crop at 530.5 million tonnes, off slightly from the 532 million seen in April. The region which accounts for 90 percent of Brazil's cane will put out 34.13 million tonnes of sugar, up slightly from the 33.68 million forecast in April.

Conab's forecast for the center-south cane and sugar outputremains on the high side of the markets range of views, which put the region's crop at roughly 510 million tonnes and sugar output at 33.2 million tonnes.

The center-south is in the peak of harvest, while the northeast does not start crushing for at least four months. Brazil's center-south cane belt is staging a modest recovery from last year's horrid results after drought and falling yields
from under investment in replanting caused the first drop in output in 11 years.

The shortage of cane and decline in output of its products sugar and ethanol are creating ripples across the global sugar and fuels markets.
The sharp rise in production costs for local mills due to the short fall in cane, has opened the door for other origins such as Russia, Thailand and India to step up exports of the sweetener.

Meanwhile, the nearly flat ethanol output in Brazil over the past couple of years has forced the state-run oil company Petrobras to turn to international gasoline markets to keep up with local fuels demand and incur major losses in its local supply business.

source: reuters

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