Sugar's share of Center-South Brazil cane crush in H2 April jumps to 18-year high

Sao Paulo — Sugar's share of the cane crush at mills in Brazil's key Center-South region in the second half of April was higher for the period than in any year since 2002, according to S&P Global Platts data.

The mills crushed 37.96 million mt of sugarcane in the second half of April or 19.63% more than in the year-ago period, data from trade association UNICA showed Tuesday.

The total amount of sugar produced in H2 April was 2.02 million mt, a 77.19% jump year on year because sugar's share of the crush was 45.76%, compared with 30.87% in the same period in 2019, it said. It was the highest share in the period since 2002, when the sweetener's share was 48.43%, according to Platts data.

"The report showed a very high sugar mix that reached a new record for modern times, inching to 45.76%, up from expectations of 43.5-43.8%. As the new crushing season has just started and already the sugar mix has reached levels typically seen during the peak of the crop, there is additional room for increases in the sugar mix for this crop season," said Claudiu Covrig, senior sugar analyst with S&P Global Platts Analytics.

In the month of April, the cumulative sugarcane crush in CS Brazil totaled 60.38 million mt. The 2020-21 crop year began April 1. April's total was a 32.33% increase compared with the year-ago period.

Cumulative sugar production in April was 2.98 million mt or an increase of 83% compared with the same period in the 2019-20 crop year.

The depreciation by the Brazilian real against most world currencies during 2020 made sugar bound for export very attractive. Sugar exports increased 52.45% to 1.42 million mt in April, compared with April 2019, according to UNICA. Domestic sales of sugar in April totaled 606,190 mt, almost unchanged from April 2019, it added.

Total Recoverable Sugar (ATR) in H2 averaged 121.83 kg/mt or an increase of 9.10% year on year. The ATR for all of April was 118.44 kg/mt or an increase of 6.75% in the same period of the 2019-20 crop year.

There were 213 sugarcane ethanol plants operational at the end of H2 April, compared with 220 a year ago. An additional 32 sugarcane ethanol plants were expected to come online by the end of May.

Favorable weather conditions, sugar production paying much better than ethanol production and the weaker Brazilian real boosting overseas demand for exports will encourage maximum sugar production at the plants.

"Theoretically a 50% sugar mix or an increase of 5 percentage points from our base case scenario and a cane crush at 610 million mt or an increase of 10 million mt, would put the total sugar production at 39.814 million mt, an increase of 4.57 million mt from our actual estimates. This higher estimated total sugar production estimate would turn the world balance into a surplus," said Covrig.

Ethanol production in CS Brazil reached 1.57 billion liters in H2 April, compared with 1.50 billion liters in H2 April 2019, UNICA said. Hydrous ethanol production accounted for 1.14 billion liters of that total while anhydrous ethanol output was 438.50 billion liters, it added.

During the entire month of April, CS mills recorded domestic sales of ethanol at 1.78 billion liters, down 29% year on year. The quantity of hydrous ethanol sold was 1.10 billion liters, or a decrease of 38.37% year on year. The quantity of anhydrous ethanol sold was 480.19 million liters, or a year-on-year decrease of 18.97%.

Corn ethanol production in Brazil continues to expand and H2 April's total of 95.58 million liters was 80.72% higher year on year, UNICA said.