Buyers of raw sugar from Brazil, the world’s top producer, are getting a smaller discount for the sweetener as millers use more of their raw material to make ethanol, according to Green Pool Commodity Specialists Pty.

Brazilian sugar for immediate loading was offered for sale last week at a discount of 0.05 cent a pound to the price of the October futures on the ICE Futures U.S. exchange in New York, the Brisbane, Australia-based researcher said in a report e-mailed today. That compares with a discount of 0.1 cent a pound a week earlier, Green Pool data showed.

Millers in the center south, Brazil’s main growing region, used 58.1 percent of all the cane processed in the second half of June to make ethanol, industry group Unica said on July 10. That’s up from 52.2 percent in the same period a year earlier. Cane processing in the period was lower at 29.1 million metric tons as rains delayed harvesting, the data showed. Last year, cane processing amounted to 31.7 million tons.

“Better ethanol prices” make the biofuel preferable to sugar for producers, Tom McNeill, a director at the company, said by e-mail today. Discounts are also narrowing as the amount of cane processed “came in lower than expected.”

Strikes at ports in Brazil may also have limited supplies for now, McNeill said. Loading of commodities was halted at 10 ships in the port of Santos, Brazil’s biggest, on July 11 because of worker protests, the harbor said.

Raw sugar from Brazil for loading in October was last week at a premium of 0.05 cent to 0.1 cent to the futures price, Green Pool data showed. That compares with no premium or discount in the previous seven-day period.

“Fine weather may bring a swing back toward sugar processing in the current and next fortnights,” McNeill said.

In Thailand, the world’s second-biggest sugar exporter, the raw sweetener was bid at a premium of 1 cent a pound to the futures price last week, unchanged from a week earlier. Thai sugar for the Japanese market, the so-called J-spec, was offered for sale at a premium of 1.70 cents a pound, an increase of 0.3 cent a pound from the previous seven-day period.

Raw sugar for delivery in October was down 0.1 percent to 16.04 cents a pound by 7:20 a.m. in New York

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