LONDON: Raw sugar premiums are steeper in the north Brazilian port of Maceio than in Santos, which faces risks of bottlenecks and serves the main centre-south growing region, where supply is limited for now.
Traders quoted premiums for very high polarisation (VHP) north Brazilian sugars loaded at Maceio at 18 points over ICE May raw sugar futures, compared with 10-15 points over May for sugar loaded at Santos, Latin America's largest port.
They said risks of logistics delays in sugar exports from Santos, combined with a lack of available sugars during the inter-crop period in the centre-south of Brazil, had driven up premiums in Maceio relative to Santos.
"If you have a tight bill of lading shipment requirement, you would want to ship from the north because there are no congestion problems," a senior physical trader said.
"There is not a lot of sugar left in the centre-south."
Hefty truck loads of grains and soybeans from abundant harvests are putting pressure on port terminals at Santos, raising risks of bottlenecks when sugar becomes available from the new crop expected to gather pace rapidly in April.
Separately, the possible purchase of 400,000 tonnes of surplus domestic sugars by the US Department of Agriculture is not expected to have any global market impact or ease oversupply in the North American Free Trade Agreement countries, traders said.
"The market appears to have (rightly) decided that the 400,000 tonnes of sugar that the USDA will buy from the domestic market and sell to ethanol producers for an estimated 10 cents a lb loss, will do little to alleviate the oversupply in NAFTA," a European broker said.
The US government is considering buying surplus domestic sugar to sell to ethanol makers for the first time in a bid to boost prices of the sweetener and prevent processors from defaulting on about $862 million in loans, according to a published report and industry sources.
Dealers talked of expectations that a big surplus of Mexican sugars from an ample harvest could enter the global market soon, weighing further on supplies.
ICE raw sugar prices hit a 2-1/2-year low of 17.61 cents a lb on Feb. 28, pressured by global surpluses.
ICE May raw sugar stood at 18.74 cents a lb, down 0.06 cent, at 1440 GMT on Thursday.
Tight Brazilian supplies during the inter-crop period had spurred the sugar price recovery this month, bolstered by government incentives to the ethanol industry, which could boost allocation to ethanol from new crop cane, European traders said.
Brokers anticipated brisk Brazilian and Thai producer selling pressure at around 19 cents a lb.
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