Fire destroys huge sugar terminal in Brazil
http://www.abc.net.au/news/2013-10-21/sugar-fire-sends-shockwaves-around-global-market/5035550October 21, 2013 at 12:26 PM
International sugar markets have reacted swiftly to one of the world's largest sugar terminals being destroyed by fire.
The price jumped 100 points in a single session on Friday to a 12-month high, amid speculation Brazilian sugar giant Copersucar's terminal could be out of action for at least the next six months.
Copersucar exports a total of 10 million tonnes annually from its four facilities in the port of Santos. That's more than three times Australia's total sugar exports.
But Green Pool Commodities analyst Tom McNeill says while the news has sent shockwaves around the industry - nowhere more so than in nearby Sao Paulo, where the world's major sugar players are meeting this week - the long-term impact is likely to be negligible.
"It's a setback in terms of 200,000 tonnes caught up in the blaze. Certainly some major outloading capacity in Brazil has been destroyed and it will take maybe six to 12 months to replace that. It will probably push physical premiums up a little, but I wouldn't have thought it's absolute panic stations at this stage."
The raw sugar price for the March 2014 contract steadied overnight at 19.5 US cents a pound, still up by 2.5 per cent, but Mr McNeill says it comes off some strength in the market prior to the fire.
"There's been substantial rain in Brazil in the past month or so," he said.
"Technically, the funds are all buying the market rather than selling it at the minute.
"They've switched their positions around, so I think the disaster with the burning of these terminals just adds a little bit of tightness that's been able to push the market up higher in the short term.
"But certainly those terminals will be rebuilt and people will work around those issues in the medium term."
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