Center-South Brazil H2 September sugar production seen up 60.8% on year: survey

Sao Paulo — Sugar production in Brazil's Center-South is expected to total 2.884 million mt in the second half of September, an increase of 60.8% year on year, an S&P Global Platts survey of 13 analysts showed Oct. 7.

"A record amount of 2.613 million mt of sugar from Brazil was delivered against the New York 11 October contract, which was interpreted by the market as a continued bullish signal because this sugar will need to be cleared from the warehouses," senior sugar analyst with S&P Global Platts Analytics, Claudiu Covrig, said.

"Although the market focused on this record delivery, Brazil production far exceeded this delivery. I estimate the CS region produced about 2.9 million mt of sugar in H2 September, almost 300 million mt more than delivered against the New York 11 October contract and up 1.1 million mt year on year."

Of the 13 analysts surveyed, the two largest producers estimated the total cane crush would be between 40.4 million mt and 41.5 million mt.

"If cane crush estimated at about 40.3 million-40.5 million mt was sustained by good weather with just about 0.8 days lost to rain and maintenance and by a significant number of mills operational (above the 255 mark) the icing on the cake was given by a huge ATR and a high sugar mix," Covrig said.

An estimated 0.7 days were lost to rain in H2 September, and 255-260 mills were active as of Oct. 1, according to analysts' estimates.

Platts assessed hydrous ethanol ex-mill Ribeirao Preto converted into raw sugar equivalent at 10.61 cents/lb on Oct. 6. The March New York contract settled at 13.88 cents/lb on Oct. 6, meaning a 3.27 cents/lb premium to hydrous ethanol in raw sugar equivalent.

Recoverable sugar, or ATR, is expected to be 160 kg/mt, an increase of 1.7% year on year. Sufficient rainfall over the summer and consistently dry weather in CS Brazil since April 1 have allowed the cane to develop well and have a high sucrose concentration.

"Due to continuous dryness the ATR is expected at 160.6 kg/mt, the highest for the year and probably the highest ATR level recorded for a fortnight," Covrig added.

The proportion of cane used for sugar production is expected to be 46.9%, up from 34.1% a year earlier, according to analysts' estimates.

Total ethanol output from sugar cane during H2 September is expected to be 2.046 billion liters, a decrease of 4.5% year on year.