MercoPress. South Atlantic News Agency

Brazil drop in production has sugar prices soaring: 73% in last twelve months

Cane production in the centre south of Brazil has declined almost 25%

Sugar jumped the most since October after an industry group said output would decline in Brazil, the world’s biggest grower. Production in the Centre South, Brazil’s largest growing area, may drop by as much as 1 million metrics in the current season compared with a year earlier, Unica said on Friday.

The sweetener has gained 73% in the past 12 months. Brazil. Raw sugar for October delivery climbed 1.84 cents, or 6.6%, to settle at 29.52 cents a pound at 2 p.m. on ICE Futures U.S. in New York, the biggest gain since Oct. 7.

Cane processing will total 535 million metric tons in the 2011-2012 season or 40 million tons less than the previous estimate and below last year’s harvest of 557 million, C Czarnikow Sugar Futures Ltd said in a report Thursday. Goldman Sachs Group Inc. said on Friday that the revised output estimate represents an “upside risk” to the bank’s three-month price forecast of 25 cents.

Production in the Centre South region has declined almost 25% this season from a year earlier, according to Unica.

“Persistently weak crushing data out of Center South Brazil has supported prices as the market begins to price in a full-year cane crush below 540 million metric tons” Morgan Stanley analyst wrote in a report dated yesterday.