Sugar prices in Brazil are expected to see a price revival in late 2014 due to two factors: a short crushing season because of drought affecting output in Brazil’s Center South region, and national elections taking place in October. The Brazilian cane industry is expecting a ‘sudden death’ or sudden drop-off in crushing in September as the country’s main cane-producing region is forecast to produce 560.5 million tons of cane for 2014/15 compared to 596 million tons last year, causing sugar output to fall to 32.3 million tons from 34.29 million tons last year. From another direction, national elections in October are widely expected to result in the elimination of the country’s policy of limiting gas prices which are currently 18% below world averages. As a result of these policies, Brazil has seen 66 mills close since 2008 and the country has become dependent upon gas imports. Price corrections for ethanol are expected to occur first which will then increase demand for cane, which will have a domino effect on sugar prices.
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