Brazil Crop Delays to Support Sugar Price, Morgan Stanley Says

Sugar prices will remain supported in the “near-term” after heavy rains delayed the start of the sugar cane harvest in Brazil, the world’s largest producer, according to Morgan Stanley.

A focus on ethanol production in the beginning of the crop will slow a later expected decline in sugar prices, the bank said.

“High ethanol prices will likely encourage millers to shift their production mix towards ethanol at least early in the season,” Hussein Allidina, head of commodities research at the bank, wrote in an e-mailed report today.

Prices will average 22 cents a pound in the 2011-12 marketing season and 19 cents a pound in 2012-13, the bank’s estimates showed. Raw sugar futures for July delivery advanced 0.3 percent to 24.95 cents a pound by 9:57 London time on ICE Futures U.S. in New York.

(Source: http://www.bloomberg.com/news/2011-04-11/brazil-crop-delays-to-support-sugar-price-morgan-stanley-says.html)