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27 Apr 2020 | 19:11 UTC — New York
Highlights
Analyst estimates suggest H1 April crush of 19.4 million mt
Sugar production estimated at 798,000 mt, up 135% on year
New York — Sugarcane crushed in the first half of April in Brazil's key Center-South region is expected to total 19.4 million mt, a surge of 39.6% year on year, an S&P Global Platts survey of analysts found Monday.
Despite the coronavirus outbreak in Brazil, which initially raised concern about possible disruptions to the harvest pace, favorable weather conditions made up for any issues with low ethanol prices or sanitary constraints with sugarcane crushing.
In the 12 analysts surveyed, three trading houses estimated total cane crush to reach over 20 million mt, while the overall analysts' range encompassed 15 million to 23 million mt.
Industry association UNICA is expected to release its official production figures this week.
Analysts surveyed by S&P Global Platts expected an average of 1.7 days lost to rain over H1 April.
The cane's total recoverable sugar (ATR) was expected to be higher year on year at 112.2 kg/mt, up from 109.34 kg/mt in H1 April 2019. From the analysts surveyed by Platts, the range was between 105 kg/mt and 116.5 kg/mt.
The proportion of cane used for sugar production in the Center-South in H1 April was expected to have surged to 38.2% from 23.49% a year ago, the survey showed. This higher sugar mix was explained by the higher sugar export prices in comparison with the steeply lower ethanol prices in the domestic market.
Platts assessed hydrous ethanol converted in raw sugar equivalent at 7.34 cents/lb on Friday, while the sugar futures market ICE NY11 settled at 9.40 cents/lb, proving that sugar export market was paying a premium of 2.06 cents/lb, or $45/mt, over domestic hydrous ethanol. With the recent further devaluation of the Brazilian real over the US dollar, Brazilian producers were receiving a premium of roughly Real 254/mt in the spot market to export sugar.
As a result of the higher sugar mix, combined with an increase in the total amount of cane and ATR, sugar production was expected to total 798,000 mt in H1 April, a surge of 135% year on year and the highest produced volume since the 2016-17 crop when 1.438 million mt was produced in the same period.
Platts estimated that sugar production will reach 695,000 mt, or 13% less than the average of analysts surveyed. This lower volumes was mostly explained by the difference in the estimated total volume of cane crushed.
Although the ethanol mix was expected to dramatically fall from 76.51% to 61.8%, the additional volume of cane crushed is expected to increase the total volume of ethanol production in 20.9% to 834 million liters.
Hydrous ethanol, which is used as the standalone E100 biofuel in Brazil, was estimated to increase in 12.5% to 702 million liters, while anhydrous ethanol output in H1 April was expected to reach 132 million liters, a jump of 100.4% from year on year. This shift in the ethanol production was explained by the lower gasoline prices in Brazil, which might contribute to higher demand of anhydrous, which is used as a mandatory blend of 27% in the Brazilian gasoline specification.
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