(Bloomberg) -- Raw sugar futures climbed for a third day on reports of fire hitting sugar-cane areas and concerns about the impact of dry weather in Brazil’s Center-South, the nation’s top-producing region.
The most-active contract advanced as much as 3.3%, after dropping to the lowest in almost two years earlier in the week.
Brazil’s top producer Raizen SA confirmed that a fire broke at a sugar-cane field near its Santa Elisa mill, at Sertaozinho, on Thursday. Flames were controlled in the same day, but hit some company equipment, and part of the mill’s biomass stocks. In the nearby city of Ibitinga, local TV reported that as much as 5 hectares of sugar cane was damaged by a fire on Wednesday.
The fires add to concerns of potential damage to crops coming from persistent dry weather and above-average temperatures. While a strong pace of sugar production in Brazil previously stoked bearish sentiment, fears are mounting over output for the second half of the country’s crop harvest.
“Lack of rains in the forecast raise risks that cane yields will suffer eventually,” said Kona Haque, head of research at ED&F Man Holdings.
Brazil’s sugar production for the year through July was running ahead of last year’s pace, but productivity declined in the second half of the month due to dry weather, according to a recent report from industry group Unica.
--With assistance from Ilena Peng.
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