SAO PAULO, Oct 1 (Reuters) - Copersucar, Brazil's largest sugar and ethanol group, sees world sugar prices rising next year from the current level after a year of losses for most of the sector's companies, its chief executive said on Wednesday.
Luis Roberto Pogetti said recent volatility in prices, caused by funds, makes it difficult to analyze the short term prospect but constructive fundamentals in sugar "should prevail."
"I've been hearing in the market price forecasts at 14 to 17 (cents per lb). The most optimistic (sources) are talking about 19 cents. I believe in this," Pogetti told Reuters.
The benchmark March raw sugar contract at the ICE was trading at around 13.90 cents per lb on Wednesday.
He said prices at those levels would take most of the companies in the Brazilian sugar industry out of the red, if the U.S. dollar remains at current levels of between 1.80 to 2 reais.
"I think that the sector, on average, could get to a break-even point (next season)," he said.
Brazil's center-south sugar cane season starts officially on April 1.
Low sugar and ethanol prices and rising input costs have been reducing Brazilian sugar and ethanol mills' margins in the current crop, despite a record cane crush.
Lower industrial yields and the appreciation of the local currency, the real, against the dollar in recent months have worsened their financial situation.
But traders and analysts expect more balanced supply and demand on the sugar market in the coming year as the world moves toward a deficit after two years of surpluses. Production in India, Brazil's biggest rival in this market, fell drastically.
Moreover, mills in Brazil are expected to divert more cane to ethanol production instead of sugar again next year, due to better returns with the biofuel and the booming domestic demand.
Pogetti said scarcity of credit which is affecting Brazilian exporters, due to the global financial crisis, has not been a problem for Copersucar, a traditional cooperative which on Wednesday announced it had become a company. [ID:nN01289382]
"There is a general worry about the financial market losing its capacity to raise funds but, so far, despite a rise in money cost, we did not feel any kind of restriction," he said.
(Reporting by Inae Riveras; editing by Reese Ewing and Jim Marshall)