CS Brazil H1 August sugar production expected to fall 5% on the year: survey

Sugar production in Brazil's key Center-South region is expected to total 2.85 million mt in the first half of August, reflecting a 5% year-on-year decline, according to results from an S&P Global Commodity Insights survey of 11 analysts released Aug. 23.

During the survey, the cane crush estimate ranged from 37 million mt to 43.8 million mt. The average estimate was for a total cane crush of 41.4 million mt, down 7.5% on the year.

Weather in the Center-South region was mostly favorable for crushing during H1 August, with less than two days expected lost to rain and 255-260 mills active as of Aug. 16.

"During the period, the spread between sugar and ethanol prices widened, incentivizing an even higher sugar mix," according to Platts Analytics. "On the other hand, significant rainfall might have disrupted both the harvest and ATR growth in the southern region of CS Brazil, which is not favorable for sugar production."

The proportion of cane used for sugar production is expected to be 47.75%, up from 46.89% a year earlier. Brazilian producers took advantage of the recent high price of ethanol during the early stages of the harvest, but now mills are shifting more of their cane crush toward sugar production.

Platts assessed hydrous ethanol ex-mill Ribeirão Preto converted into raw sugar equivalent was at 14.28 cents/lb Aug. 22, S&P Global data showed. The October NY11 sugar futures contract settled Aug. 22 at 17.94 cents/lb, reflecting a 3.66-cent premium to the hydrous ethanol price expressed in raw sugar equivalent ex-CBIOs.

Sugar's premium to ethanol production would move closer to 2.90 cents/lb if decarbonization credits were added into the premium calculation. The CBIO, which is equivalent to 1 mt of CO2 not released into the atmosphere, is an instrument biofuel producers and importers issued to ensure that Brazil attains its decarbonization targets.

The recoverable sugar per ton of sugar cane, or ATR, is expected to be 151 kg/mt, down 1.3% year on year.

Total ethanol output from sugar cane is expected to be 2.11 billion liters in H1 August, down 5% 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 3.9% on the year. Anhydrous ethanol output in H1 August was expected to be 860 million liters, or 6.7% lower year on year, according to the survey.

Industry association UNICA is expected to release its official production figures by the end of this week.