Sugar prices surged to the highest level in a year after a fire engulfed six warehouses at the Brazilian port of Santos, threatening to put one of the world's biggest sugar terminals offline for up to six months.
Codesp, which manages operations at Latin America's biggest port, said a fire broke out just after 6am on a conveyor belt. It spread rapidly across all the warehouses at a terminal owned by Copersucar, Brazil's biggest trader of sugar and ethanol.
Copersucar said late on Friday that around 180,000 tonnes of raw sugar had been engulfed by the fire. Codesp had earlier estimated losses at up to 300,000 tonnes, based on the capacity of the affected warehouses. The sugar lost is equivalent to about 7 per cent of the 2.55m tonnes of sugar shipped last month from Brazil.
ICE March raw sugar was up 1.5 per cent to 19.28 cents per pound at midday in New York, after leaping 6.1 per cent to a one-year high of 20.16 cents early in the session.
"It's bad, it's destroyed [warehouses] and the conveyor belts that lead to the ship loaders," said Michael McDougall at commodity brokers Newedge in New York.
"One estimate is it could take up to six months to get operational in some form again so the impact on the delivery and next year's harvest will be felt," he added. Codesp said firefighters had brought the fire under control by midday and were cooling down the burnt warehouses.
Brazil is the world's biggest sugar exporter by a wide margin, supplying about half the world trade in it. "The port of Santos is a key port for sugar exports globally," said Sterling Smith, futures specialist at Citi in Chicago. "That is where a great deal of the sugar moves out."
While it will take time to assess damage, he said, "we are running risk of infrastructure problems which may interfere with movements and tighten supplies".
Nevertheless, Brazil's expected record sugar crop this year would offset an interruption. "The world is awash in sugar. We have plenty of it," Mr Smith said.
The fire, which left at least three people injured according to local media, is set to bring Brazil's creaking infrastructure under more scrutiny.
Codesp said it did not yet know how the fire started on the conveyor belt. The port of Santos, which processes a quarter of Brazil's foreign trade and over half its shipments of agricultural produce such as corn, is already famous for its delays - truck drivers often have to wait up to five days just to offload.
However, Brazil's government has promised to tackle the problem, approving a R$54.2bn ($25.1bn) reform package for Brazil's ports in June this year.
Additional reporting by Ajay Makan in London
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