Center-South Brazil H2 April sugar production increased 69.6% on year: survey

Sao Paulo — Sugar production in the key Center-South Brazil region is expected to total 1.768 million mt in the second half of April, an increase of 69.6% year on year, an S&P Global Platts survey of 12 analysts showed Friday.

Weather in the Center-South was favorable for crushing during H2 April, with an estimated 0.6 days lost to rain and about 210-215 mills active as of May 1.

The proportion of cane used for sugar production is expected to be 43.8%, up from 30.87% a year earlier. Brazilian producers are expected to continue to maximize their sugar production, given the increased profitability of sugar production over ethanol production.

"Previous UNICA numbers reported for the first half of April confirmed the fact that this year we are working in a completely different scenario compared to last year, as mills are maximizing the sugar share of the mix due to a constant sugar premium over ethanol. I expect a recovery in the sugar mix from 39.7% in H1 April to 43% or above," said Claudiu Covrig, senior sugar analyst with S&P Global Platts Analytics.

Platts assessed hydrous ethanol ex-mill Ribeirao Preto converted into raw sugar equivalent at 7.78 cents/lb Thursday. The July NY11 sugar futures contract settled Thursday at 10.33 cents/lb, providing a 2.55 cents/lb discount to hydrous ethanol in raw sugar equivalent.

"The most important parameter to be revealed for H2 April would be the sugar mix. This will show us how fast the mills can raise the mix from one fortnight to another, taking into account that at the beginning of any season cane is still wet and the ATR level is lower," said Claudiu.

Recoverable sugar per ton of sugar cane, or ATR, is expected to be 120.0 kg/mt, a decrease of 0.1% year on year.

Of the 12 analysts surveyed, two large producers estimated the total cane crush would be between 35.5 million and 38 million mt.

Total ethanol output from sugar cane is expected to be 1.438 billion liters, a decrease of 0.71% year on year.

Hydrous ethanol output was expected to be 1.093 billion liters, according to the average of the analysts' responses to the survey. This would be a decrease of 4.0% year on year. Anhydrous ethanol output in H2 April was expected to be 345 million liters, an increase of 11.5% year on year, according to the survey.