* Applies to contracts to move sugar through fire-guttedSantos Port terminal
* Shippers include Dreyfus, Bunge units
* Shiploaders, loading equipment are unharmed - CEO
SAO PAULO, Oct 22 (Reuters) - Brazil's largest trader ofsugar and ethanol declared force majeure to third partyexporters of sugar with contracts to ship through its SantosPort terminal that burned down on Friday, sources in the sugartrade said.
Two sources in separate international sugar trading housessaid on Tuesday that Copersucar issued force majeure notices tothird-party sugar traders that had contracted capacity at itsterminal, as well as Bunge Ltd.
A local representative of French commodities trader LouisDreyfus confirmed earlier trader reports that it had received anotice of force majeure from Copersucar. Spokesman Jose Ossesaid however the force majeure did not involve the Braziliansugar business BioSev, which operates independent ofLouis Dreyfus and has export terminal space with U.S.agricultural commodities company Cargill.
As traders raced to cover positions after news of the fireat Copersucar's terminal came out on Friday, the market began toquestion how Copersucar would deliver the huge tonnage it soldto Louis Dreyfus against the expiring October contract earlierthis month.
Force majeure is a legal term referring to unforeseencatastrophic events freeing companies of contractual liabilitiesbecause events prevent it from honoring obligations.
Bunge representatives said they were considering a responseto requests from Reuters for comment late on Tuesday. ACopersucar executive at a Sao Paulo event Tuesday night declinedto comment on any possible cancellation of contracts.
Copersucar Chief Executive Paulo Roberto de Souza did,however, give some details on the state of the terminal, thecapacity of which the company in June had doubled to 10 milliontonnes a year.
"We were just able to get in for the first time on Sundayand I can say the shiploaders and loading equipment areunharmed, which is good news," de Souza said to a packed VIProom at one of Sao Paulo's poshest malls, Shopping JK Iguatemi.
Fire swept through five of Copersucar's warehouses at itsSantos sugar export terminal on Friday, wiping out 10 milliontonnes of Brazil's sugar export capacity for several months atleast.
Traders from around the world mingling at the Copersucarevent said spare export capacity was not in abundant supply inBrazil and that Copersucar would face great challenges both inthe short and medium term meeting its delivery contracts.
Under the best of scenarios, some traders said that thecompany might have some raw sugar export capacity up and runningby May of 2014, but they admitted that was optimistic.
Copersucar executives said Tuesday night their teams wereworking "24 hours a day to get operations running again."
One sales manager at a large sugar trader said Copersucarhas contracts to move 1 million tonnes of raw sugar throughDecember, which he did not see possible given the relativelytight export capacity as it is.
The market is even weighing the loss of capacity atCopersucar's sugar terminal on Brazil's ability to ship grains.During off-peak months for sugar exports last year, sometraditional sugar terminals such as Cosan's Rumo andNoble converted some of their sugar capacity to handle soy andcorn shipments.
But most traders say that the company's greatest challengewill come when next year's cane harvest peaks in June. Mostpeople in the industry do not believe Copersucar will be able toregain most of its export capacity by that time.
One chief sugar analyst at a medium-sized Asian trader saidat the event that Copersucar was actively seeking idle terminalspace that could be quickly brought online to handle a portionof their sugar export business, which totaled 7 million tonnesin 2012. The company expected to reach 9 million tonnes thisyear before the fire hit its port warehouse complex.
"Brazil had the capacity to export 3 million tonnes of sugara month. Now it can only export 2.4 million tonnes a monthwithout Copersucar's terminal," the analyst said, declining tobe named due to his company's professional relationship with theBrazilian trader.
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