CS Brazil H1 Oct sugar production expected to rise 69.1% on year: survey

Sugar production in Brazil's Center-South is expected to total 1.95 million mt in the first half of October, reflecting a 69.1% increase on the year, a S&P Global Commodity Insights survey of 12 analysts showed Oct. 21.

"The crushing pace in the previous crop year was already slowing down in this period," said Luciana Torrezan, head of sugar analytics with S&P Global Commodity Insights. "There is an elevated risk for mills to operate this until December and leave some cane standing on the fields."

During the survey, the cane crush estimate for H1 October ranged from 28.0 million mt to 32.0 million mt. The average estimate was for a total cane crush of 29.9 million mt, up 51.8% on the year.

"The gap in cumulative production between the current and prior crop year is expected to narrow thanks to weather in H1 October being more favorable for crushing compared to H2 September," said Torrezan. "Weather in the coming weeks will be crucial in defining the size of production until the end of this year."

The proportion of cane used for sugar production is expected to be 46.06%, up from 39.17% a year ago. Brazilian producers took advantage of high ethanol price during the early stages of the harvest, but mills have shifted more of their cane crush toward sugar production for the remaining harvest period to take advantage of sugar's premium over ethanol production.

Platts, part of S&P Global, assessed hydrous ethanol ex-mill Ribeirão Preto converted into raw sugar equivalent at 15.49 cents/lb Oct. 20.

The March NY11 sugar futures contract settled at 18.39 cents/lb Oct. 20, reflecting a 2.90 cents/lb premium to the hydrous ethanol price expressed in raw sugar equivalent ex-CBIOs.

Sugar's premium to ethanol production would move closer to 2.35 cents/lb if decarbonization credits were added to the premium calculation. The CBIO, equivalent to 1 mt of CO2 not released into the atmosphere, is an instrument biofuel producers and importers are issued to ensure Brazil attains its decarbonization targets.

Recoverable sugar per ton of sugarcane, or ATR, is expected to be 148.33 kg/mt, 5.2% lower year on year.

Total ethanol output is expected to be 1.59 billion liters, up 28.1% on the year.

Hydrous ethanol output was expected to be 902 million liters, according to the average of the analysts' responses to the survey. This would be an increase of 38% on the year. Anhydrous ethanol output in H1 October was expected to be 675 million liters, up 14.6% on the year, according to the survey.

Industry association UNICA is expected to release its official production figures early in the week starting Oct. 24.