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UPDATE 1-Copersucar sees smaller Brazil crop, better outlook for sugar market

(Adds CEO comments, context)

By Marcelo Teixeira

SAO PAULO, June 18 (Reuters) - Brazil's Copersucar, the world's largest sugar and ethanol seller, expects smaller sugar production in the Brazilian center-south region in the current season due to ageing cane fields and drier weather and sees a more positive outlook for sugar prices going forward.

Copersucar expects total sugar production in the center-south in 2018/19 to be 28 million tonnes versus 36 million tonnes in the previous crop, company Chief Executive Paulo Roberto de Souza told reporters. Total cane crush is seen at 555 million tonnes compared to 596 million tonnes previously.

The Brazilian company, which is in charge of selling sugar and ethanol produced by 35 associated center-south mills, closed the 2017/18 crop crushing 85 million tonnes of cane, 3 percent less than in the previous season. It expects to crush 83 million tonnes in the new crop (2018/19, April-March).

The firm said its net profit last season fell 42 percent to 147 million reais, affected by smaller gains from its joint venture with Cargill called Alvean.

"Sugar prices fell due to the global oversupply and we also had low volatility in those prices, which impacted Alvean (negatively)," Souza said.

Alvean's traded volume last season was stable at 12.1 million tonnes, around a third of the global export market. The venture sourced 7.9 million tonnes of that volume in Brazil, less than in previous seasons.

Souza said he saw a tougher environment for Alvean to source sugar in Brazil in the current season, adding, "They will have to fight to keep sourcing at 7.9 million tonnes."

For example Copersucar contributed 4.5 million tonnes of the volumes Alvean sourced last year in Brazil, but will produce only 4 million tonnes this year.

Copersucar will increase ethanol production slightly from 4.3 billion liters in 2017/18 to 4.5 billion liters in the new season. Ethanol sales in Brazil currently give a financial return equivalent to a hypothetical sugar price of 16 cents per pound, Souza said. (Reporting by Marcelo Teixeira Editing by Frances Kerry)

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