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March 22, 2011

Sugar Exporters Worried about Potential Delays at Brazilian Ports

Sugarcane producers in Brazil are gearing up for the start of the 2011/12 harvest season and exporters are already concerned about a repeat of significant delays they experienced last year in moving sugar out of Brazilian ports. The two leading ports for Brazilian sugar exports are the Port of Santos in the state of Sao Paulo and the Port of Paranagua in the state of Parana. Inadequate infrastructure at both ports resulted in very significant delays in mid-2010 and very little improvement has been made in the infrastructure during the intervening year.

Sugar arrives at Brazilian ports in two forms - bulk and in sacks. Either way that the sugar arrives at the ports, the sugar cannot be allowed to get wet during the unloading or loading process. During a period of rain last June at the Port of Santos, the loading operations were paralyzed and the delays got so bad that 40 vessels were forced to wait in the harbor for their turn to load sugar. Brazil is the largest sugar exporter and the 2011/12 sugar production is expected to be 33.9 million tons, which would surpass last year's production. No one knows if delays will develop once again this year, but no significant improvements in infrastructure have been put in place since last year to prevent a reoccurrence.

The sugarcane harvest is set to begin in Parana before the end of March and the state is expected to produce 8.8% more sugarcane than the 43.3 million tons produced in 2010/11. Sugarcane acreage in Parana is estimated be 670,000 hectares and the state is expected to produce 3.4 million tons of sugar (an increase of 13.3%) and 1.7 billion liters of ethanol (an increase of 6.2%). Fourteen of the 30 sugar/ethanol mills in the state are expected to resume operations before the end of the month. Two mills in the state that only produced ethanol in the past will now produce both ethanol and sugar. Parana is the fourth largest sugarcane producing state in Brazil after Sao Paulo, Minas Gerais, and Goias.

Nationwide, it is estimated that 45.6% of the sugarcane will be used to produce ethanol and 54.4% will be used to produce sugar. The percentage of the sugarcane crop used to produce sugar is slightly higher than in previous years.