Center-South Brazil H1 August sugar production expected to decrease 8.5% on year: survey

Sugar production in the key Center-South Brazil region is expected to total 2.963 million mt in the first half of August, down 8.5% year on year, an S&P Global Platts survey of 12 analysts showed Aug. 23.

Of the analysts surveyed, the cane crush estimate ranged from 43.3 million mt to 46.0 million mt. The average estimate was for a total cane crush of 44.6 million mt, a 4.2% drop year on year.

"The Center-South Brazil 2021-22 sugarcane harvest is proving to be one of the most challenging seasons on record," said S&P Global Platts Analytics. "We have reduced the cane supply forecast to the lowest since 2011-12 at 522 million mt. and in addition to a prolonged drought, Brazil is now feeling the impact of three consecutive frosts, which can still lead to a further reduction in our estimates."

The proportion of cane used for sugar production is expected to be 46.6%, down from 47.7% a year earlier. Although Brazilian producers were taking advantage of the recent high prices of hydrous and anhydrous ethanol, long-term expectations are for mills to continue to maximize their sugar production, given the increased profitability of sugar production over ethanol production.

Platts assessed hydrous ethanol ex-mill Ribeirao Preto converted into raw sugar equivalent at 17.62 cents/lb on Aug. 23. The October NY11 sugar futures contract settled Aug. 23 at 19.58 cents/lb, providing a 1.96 cent/lb premium to hydrous ethanol in raw sugar equivalent.

Recoverable sugar per ton of sugar cane, or ATR, is expected to be 149.6 kg/mt, a decrease of 2.2% year on year.

Total ethanol output from sugar cane is expected to be 2.15 billion liters, a decrease of 2.1% year on year.

Hydrous ethanol output was expected to be 1.25 billion liters, according to the average of the analysts' responses to the survey. This would be a decrease of 16.8% year on year. Anhydrous ethanol output in H1 August was expected to be 865 million liters, an increase of 24.8% year on year, according to the survey.

"While sugar and hydrous production numbers in H1 August should continue to show sharp declines, the anhydrous output remains resilient and should reach the highest for the period since 2017-18," said Platts Analytics. "The tight feedstock availability means Brazilian millers must remain committed to ensure there will be sufficient domestic supply for the mandatory blend with gasoline."

Total ethanol output from corn is expected to be 124 million liters, an increase of 33.3% year on year. Hydrous ethanol output was expected to be 86 million liters, an increase of 30.9% year on year, and anhydrous ethanol output in H1 August was expected to be 38 million liters, an increase of 46.2% year on year.

Industry association UNICA is expected to release its official production figures in the upcoming days.