August 9, 2012 / 2:56 PM / 5 years ago

UPDATE 3-Gov't trims Brazil cane view, holds sugar steady

* Conab cane view seen down slightly from April
    * Sugar estimate virtually unchanged from April
    * Main center-south cane crop shaved to 530 mln tns

 (New throughout, updates with full sugar report)
    By Reese Ewing
    SAO PAULO, Aug 9 (Reuters) - 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 output
remains 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
    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.  

 (Reporting by Reese Ewing; Editing by Marguerita Choy, Sofina
Mirza-Reid and David Gregorio)
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