UPDATE 2-Brazil's Copersucar issues force majeure to sugar exporters -sources

Wed Oct 23, 2013 12:59pm EDT
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* Applies to contracts to move sugar through fire-gutted Santos Port terminal

* Shippers include Dreyfus, Bunge units

* Shiploaders, loading equipment are unharmed - CEO

SAO PAULO, Oct 22 (Reuters) - Brazil's largest trader of sugar and ethanol declared force majeure to third party exporters of sugar with contracts to ship through its Santos Port terminal that burned down on Friday, sources in the sugar trade said.

Two sources in separate international sugar trading houses said on Tuesday that Copersucar issued force majeure notices to third-party sugar traders that had contracted capacity at its terminal, as well as Bunge Ltd.

A local representative of French commodities trader Louis Dreyfus confirmed earlier trader reports that it had received a notice of force majeure from Copersucar. Spokesman Jose Osse said however the force majeure did not involve the Brazilian sugar business BioSev, which operates independent of Louis Dreyfus and has export terminal space with U.S. agricultural commodities company Cargill.

As traders raced to cover positions after news of the fire at Copersucar's terminal came out on Friday, the market began to question how Copersucar would deliver the huge tonnage it sold to Louis Dreyfus against the expiring October contract earlier this month.

Force majeure is a legal term referring to unforeseen catastrophic events freeing companies of contractual liabilities because events prevent it from honoring obligations.

Bunge representatives said they were considering a response to requests from Reuters for comment late on Tuesday. A Copersucar executive at a Sao Paulo event Tuesday night declined to comment on any possible cancellation of contracts.   Continued...