* Applies to contracts to move sugar through fire-gutted
Santos Port terminal
* Shippers include Dreyfus, Bunge units
* Shiploaders, loading equipment are unharmed - CEO
SAO PAULO, Oct 22 Brazil's largest trader of
sugar and ethanol declared force majeure to third party
exporters of sugar with contracts to ship through its Santos
Port terminal that burned down on Friday, sources in the sugar
Two sources in separate international sugar trading houses
said on Tuesday that Copersucar issued force majeure notices to
third-party sugar traders that had contracted capacity at its
terminal, as well as Bunge Ltd.
A local representative of French commodities trader Louis
Dreyfus confirmed earlier trader reports that it had received a
notice of force majeure from Copersucar. Spokesman Jose Osse
said however the force majeure did not involve the Brazilian
sugar business BioSev, which operates independent of
Louis Dreyfus and has export terminal space with U.S.
agricultural commodities company Cargill.
As traders raced to cover positions after news of the fire
at Copersucar's terminal came out on Friday, the market began to
question how Copersucar would deliver the huge tonnage it sold
to Louis Dreyfus against the expiring October contract earlier
Force majeure is a legal term referring to unforeseen
catastrophic events freeing companies of contractual liabilities
because events prevent it from honoring obligations.
Bunge representatives said they were considering a response
to requests from Reuters for comment late on Tuesday. A
Copersucar executive at a Sao Paulo event Tuesday night declined
to comment on any possible cancellation of contracts.
Copersucar Chief Executive Paulo Roberto de Souza did,
however, give some details on the state of the terminal, the
capacity of which the company in June had doubled to 10 million
tonnes a year.
"We were just able to get in for the first time on Sunday
and I can say the shiploaders and loading equipment are
unharmed, which is good news," de Souza said to a packed VIP
room at one of Sao Paulo's poshest malls, Shopping JK Iguatemi.
Fire swept through five of Copersucar's warehouses at its
Santos sugar export terminal on Friday, wiping out 10 million
tonnes of Brazil's sugar export capacity for several months at
Traders from around the world mingling at the Copersucar
event said spare export capacity was not in abundant supply in
Brazil and that Copersucar would face great challenges both in
the short and medium term meeting its delivery contracts.
Under the best of scenarios, some traders said that the
company might have some raw sugar export capacity up and running
by May of 2014, but they admitted that was optimistic.
Copersucar executives said Tuesday night their teams were
working "24 hours a day to get operations running again."
One sales manager at a large sugar trader said Copersucar
has contracts to move 1 million tonnes of raw sugar through
December, which he did not see possible given the relatively
tight export capacity as it is.
The market is even weighing the loss of capacity at
Copersucar's sugar terminal on Brazil's ability to ship grains.
During off-peak months for sugar exports last year, some
traditional sugar terminals such as Cosan's Rumo and
Noble converted some of their sugar capacity to handle soy and
But most traders say that the company's greatest challenge
will come when next year's cane harvest peaks in June. Most
people in the industry do not believe Copersucar will be able to
regain most of its export capacity by that time.
One chief sugar analyst at a medium-sized Asian trader said
at the event that Copersucar was actively seeking idle terminal
space that could be quickly brought online to handle a portion
of their sugar export business, which totaled 7 million tonnes
in 2012. The company expected to reach 9 million tonnes this
year before the fire hit its port warehouse complex.
"Brazil had the capacity to export 3 million tonnes of sugar
a month. Now it can only export 2.4 million tonnes a month
without Copersucar's terminal," the analyst said, declining to
be named due to his company's professional relationship with the