3 MIN. DE LECTURA
(Adds comment from consultant)
By Marcelo Teixeira
SAO PAULO, June 21 (Reuters) - Trading losses in the second part of the 2015-16 crop year, when sugar prices steadily rose, hurt the financial performance of the world's top sugar merchant Alvean, wiping out an early profit in the start of the year.
Alvean, a sugar trading joint venture between U.S. company Cargill and Brazil's Copersucar, performed well on origination of sugar, logistics and physical market operations, Copersucar Chief Executive Paulo Roberto de Souza said.
"But in the trading side, in the bets, it was not a good year for Alvean," Souza said in a conference call with reporters.
Copersucar, the world's largest sugar cooperative that units the output in sugar and ethanol of 20 Brazilian companies, exceeded management's expectations in securing physical sugar for Alvean to trade, surpassing 9 million tonnes last season, Luís Roberto Pogetti, the coop's chairman, said.
Copersucar's ability to tap such a large volume of physical product in Brazil, the world's largest producer of sugar, highlights the logic behind Cargill's decision to form Alvean.
But the trading losses illustrate the difficulty of dealing in a market that turned from a six-year oversupply to expectations of large deficits in a short time.
"They bet on a position and it didn't work out, although it's hard to know exactly what it was," said Alexandre Figliolino, a sugar industry expert at MB Agro Associados.
"In a company managing such a large volume of sugar, any wrong bet can make a large difference in the final result," he added.
Souza and Pogetti declined to elaborate on Alvean's trading strategies.
The joint venture was formed in 2014 when Cargill and Copersucar decided to combine their global sugar trading operations.
Souza said the venture traded 11.5 million tonnes of sugar, or around 30 percent of the global market, in the April-March 2015-16 crop year.
He said volumes should increase 10 percent to 15 percent in the current season since sugar output is seen rising to around 35 million tonnes from about 31.5 million tonnes in last crop in Brazil's center-south.
Sugar prices rose steadily since mid-2015 as projections for a global shortage increased.
The October raw sugar contract in New York reached a contract high of 20.22 cents per pound on June 16.
Mills in Brazil have sold forward all along the rise, but many fixed sugar prices very early in the trend, becoming vulnerable to margin calls by the exchange. (Additional reporting by Silvio Cascione; Editing by Lisa Von Ahn and Bernard Orr)