SAO PAULO/NEW YORK: Brazilian mills in the main centre-south (CS) region produced 2.19 million tonnes of sugar in the first half of June, 14% less than in the same period last year and way below market expectations.

According to a bi-weekly production report by industry group Unica released on Friday, CS mills crushed 35.9 million tonnes of cane in the period, also 14% below last year.

Ethanol production fell less, Unica said, at 1.68 billion liters, or 8.7% below last year’s volume.

Raw sugar futures erased earlier losses after the report, and were up 0.3%, before weakening again.

Analysts surveyed by information provider S&P Global Platts expected sugar production to be 2.47 million tonnes and cane crush 40 million tonnes for the first half of June.

“The data was in the low end of expectations, for both crush and mix,” said a US sugar broker, referring to strategy by mills to allocate cane to sugar or ethanol production depending on market prices.

Mills allocated 46.2% of cane to sugar production early in June versus 47% at this time last season. Platts estimate was for a 46.6% sugar mix.

Unica’s technical director Antonio de Padua Rodrigues said the smaller activity in the period was caused by rains in the states of Sao Paulo, Parana and Mato Grosso do Sul, which led to temporary halts in harvesting.

The US broker, however, said agricultural yields, or the amount of cane per hectare, continue to lag last season’s.

“There was a 10.4% drop in yield in May, it is 10.6% down since the start of the crop, so not improving.”

Unica said agricultural yields were down 15% in the first half of June, a likely result from drier-than-normal weather in Brazil this year.—Reuters