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CS Brazil H1 June sugar production expected to increase 7.7% on year: survey

Highlights

Sugar's share of H1 June cane crush expected at 44.6%: analysts

H1 June hydrous ethanol output seen up 23.8% on year: survey

Sugar production in the key Center-South Brazil region is expected to total 2.4 million mt in the first half of June, reflecting an increase of 7.7% on the year, an S&P Global Commodity Insights survey of 12 analysts showed June 23.

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During the survey, the cane crush estimate ranged from 39.4 million mt to 45 million mt. The average estimate was for a total cane crush of 42.2 million mt, a 15.6% increase on the year.

Weather in the Center-South was favorable for crushing during H1 June, with less than one day expected lost to rain and about 250-255 mills active as of June 16.

"Although there is a wide range of estimates for the H1 June cane crush, there is still broad consensus, with the expected production mix still in favor for ethanol production compared to last year," according to S&P Global. "Additionally, H1 June production figures are expected to be higher than last year because of the heavy rainfall during H1 June 2021 in the Southeast, which had caused mills to shutter production for a few days."

The proportion of cane used for sugar production is expected to be 44.6%, down from 46.2% 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 expected to start shifting more of their cane crush toward sugar production.

Platts assessed hydrous ethanol ex-mill Ribeirao Preto converted into raw sugar equivalent was at 17.57 cents/lb on June 22, according to S&P Global data. The July NY11 sugar futures contract settled June 22 at 18.45 cents/lb, reflecting a 0.88 cent/lb premium to the hydrous ethanol price expressed in raw sugar equivalent ex-CBIOs.

Sugar's premium to ethanol production would move closer to 0.25 cent/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 issued by biofuel producers and importers to ensure Brazil attains its decarbonization targets.

Recoverable sugar per ton of sugar cane, or ATR, is expected to be 133.6 kg/mt, a decrease of 3.5% on the year.

Total ethanol output from sugar cane is expected to be 1.95 billion liters, up 13.9% on the year.

Hydrous ethanol output was expected to be 1.24 billion liters, according to the average of the analysts' responses to the survey. This would be an increase of 23.8% on the year. Anhydrous ethanol output in H1 June was expected to be 710 million liters, 0.1% lower on the year, according to the survey.

Industry association UNICA is expected to release its official production figures early next week.

CS Brazil Cane Production Data – H1 June 2022 (as of June 16)

Category
Unit
Survey
Platts
UNICA (2021-22)
Y-O-Y**
var. Vol. y-o-y**
Cane crush
(million mt)
42.18
44.2
36.5
15.60%
5.68
ATR
(kg/mt cane)
133.61
133.2
138.48
-3.50%
-4.87
Sugar output
(thousand mt)
2,398
2,500
2,227
7.70%
171.3
Ethanol total*
(million ltr)
1,954
2,070
1,715
13.90%
239
Hydrous output*
(million ltr)
1,244
1,320
1,005
23.80%
239
Anhydrous output*
(million ltr)
710
750
711
-0.10%
-1
Sugar Mix
(%)
44.62
44.8
46.24
-3.50%
-1.62
Ethanol Mix
(%)
55.38
55.2
53.76
3.00%
1.62

*corn ethanol included

Sources: S&P Global Platts Pre-Report Survey of Analysts Results, UNICA.

**Year-on-year change compares S&P Global Platts Survey against UNICA's figures for 2021-22