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CS Brazil H2 July sugar production expected to increase 6.7% on year: survey

Highlights

Sugar's share of H2 July cane crush expected at 47.6%: analysts

H2 July ethanol output seen up 1.3% on year: survey

Sugar production in the key Center-South Brazil region is expected to total 3.25 million mt in the second-half July, reflecting an increase of 6.7% on the year, an S&P Global Commodity Insights survey of 11 analysts showed Aug. 9.

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During the survey, the cane crush estimate ranged from 48.0 million mt to 49.5 million mt for H2 July. The average estimate was for a total cane crush of 48.6 million mt, a 3.6% increase on the year.

Weather in the Center-South was favorable for crushing during H2 July, with less than one day expected lost to rain and about 255-260 mills active as of Aug. 1.

"The market consensus is that crushing should exceed the same fortnight from last year and that the sugar mix should continue increasing in relation to prior fortnights," according to Platts Analytics. "Additionally, the range of analysts' estimates for H2 July is in a very tight range."

The proportion of cane used for sugar production is expected to be 47.6%, up 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 at 16.66 cents/lb on Aug. 8, according to S&P Global Commodity Insights data. The October NY11 sugar futures contract settled Aug. 8 at 17.96 cents/lb, reflecting a 1.30 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 0.50 cents/lb if decarbonization credits were added into 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 147.3 kg/mt, a decrease of 0.1% on the year.

Total ethanol output from sugar cane is expected to be 2.38 billion liters, up 1.3% on the year.

Hydrous ethanol output was expected to be 1.45 billion liters, according to the average of the analysts' responses to the survey. This would be an increase of 5.8% on the year. Anhydrous ethanol output in H2 July was expected to be 931 million liters, 4.9% 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 -- H2 July 2022 (as of Aug. 1)

Category
Unit
Survey
Platts
UNICA (2021-22)
Y-O-Y**
var. Vol. y-o-y**
Cane crush
(million mt)
48.58
48.6
46.91
3.60%
1.67
ATR
(kg/mt cane)
147.28
147.5
147.42
-0.10%
-0.14
Sugar output
(thousand mt)
3,252
3,257
3,047
6.70%
204.8
Ethanol total
(million ltr)
2,379
2,382
2,347
*
1.30%
31.5
Hydrous output
(million ltr)
1,447
1,417
1,368
*
5.80%
79
Anhydrous output
(million ltr)
931
965
979
*
-4.90%
-48
Sugar Mix
(%)
47.64
47.7
46.24
3.00%
1.4
Ethanol Mix
(%)
52.32
52.3
52.8
-0.90%
-0.48

*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