By Marcelo Teixeira, Roberto Samora and Mayank Bhardwaj
NEW YORK/SAO PAULO/NEW DELHI, June 8 (Reuters) – More than
70 ships are lined up at Brazil’s port of Santos to load sugar
for export in a queue that may take a month to clear after
buyers worldwide scrambled to get ahead of possible disruption
caused by the ravages of the coronavirus pandemic.
A large share of the global sugar trade turned to Brazil,
which posted record output, and after poor harvests in India and
Thailand. The South American nation now has, however, the
second-most COVID-19 cases worldwide at more than 610,000.
Three bulk carriers had loading operations suspended in
recent weeks and faced a 14-day quarantine in Santos, Latin
America’s largest port, after crew members tested positive for
COVID-19. A vessel at the nearby Paranagua port had the same
“The situation has been complicated by the virus. Everyone
is nervous about what happens if vessels are unable to berth or
load quickly,” said Stephen Geldart, head of analysis at food
supply chain services company Czarnikow Group Ltd.
In Santos, the flotilla is waiting to take more than 3
million tonnes of sugar to refiners worldwide, compared with
just 15 ships to load 700,000 tonnes at this time last year,
according to Williams shipping agency. The typical wait time is
29 days, up from four or five days last year.
Two sugar traders told Reuters that buyers were unlikely to
cancel contracts, because it would be a high risk for them to
find alternative supplies.
“India would be an alternative, but they are having problems
as well at ports due to coronavirus,” said Cheng Gonk Vin, head
sugar trader at Brazil’s SCA Trading.
Vin said there will be additional costs for traders with
‘demurrage,’ a fee charged by vessel owners when ships stay
longer than expected at ports. That charge is seen at around
$20,000 per waiting day.
“It is mayhem in Santos,” said a second trader, describing
traders’ struggle to find space. He said some traders were
negotiating with mills to postpone shipments.
Buyers of May raw sugar futures purchased 2.26 million
tonnes for delivery in that contract, a monthly record. That
sugar needs to be delivered to New York by the end of July and
has increased the congestion in Santos. Asian commodities
traders COFCO International and Wilmar International
were the deliverers and will have to pay that
COFCO and Wilmar did not return requests for comment.
“Many countries, particularly in Asia, fearing supply chain
problems due to coronavirus decided to guarantee supplies to
form strategic stockpiles,” said the head of one of the largest
sugar groups in Brazil, who asked not to be named.
Some mills opted to send sugar to other ports to avoid
delays. Alta Mogiana SA, a producer based in Brazil’s main sugar
belt, said for the first time ever it decided to send sugar to
two ports other than Santos.
Sugar market dealers say that despite a smaller crop this
season, India could benefit from logistical problems in Brazil.
“Indian mills will cash in on any drop in sugar supplies
from Brazil due to the long line-up there,” said Rahil Shaikh,
managing director at MEIR Commodities India.
There are still 1.5 million tonnes of sugar to be exported
with help from government-approved subsidies, Shaikh said, which
could make Indian output competitive.
Thailand is less likely to benefit after a poor crop hit by
drought, said Virit Viseshsinth, deputy secretary-general of
Thailand’s Office of Cane and Sugar Board.
The country has less than 6 million tonnes of sugar for
exports for the crop year, significantly less than earlier
years, most of it already committed.
(Reporting by Marcelo Teixeira and Roberto Samora; Additional
reporting by Patpicha Tanakasempipat and Panarat Thepgumpanat,
in Bangkok, and Mayank Bhardwaj, in New Delhi; Editing by David
Gaffen, Simon Webb and Steve Orlofsky)