Center-South Brazil H2 May sugar production increased 39.7% on year: survey

New York — Sugar production in Brazil's key Center-South region is expected to total 2.614 million mt in the second half of May, an increase of 39.7% year on year, an S&P Global Platts survey of 11 analysts showed June 9.

Weather in the Center-South was favorable for crushing during H2 May with an estimated 1.5 days lost to rain and about 235-245 mills active as of June 1.

The proportion of cane used for sugar production is expected to be 48.4%, up from 35.07% a year earlier. Brazilian producers are expected to continue to maximize their sugar production, given the increased profitability of sugar production over ethanol production.

"The sugar mix will attain another fortnightly record for this season as plummeting ethanol demand means ethanol is no longer an instant source of cash or the commodity that pays better in the Center-South region," said Claudiu Covrig, senior sugar analyst with Platts Analytics. "Mills that used to produce ethanol are now in the sugar business and are interested in how fast they can cash-in their volumes of sugar."

Platts assessed hydrous ethanol ex-mill Ribeirao Preto converted into raw sugar equivalent at 10.77 cents/lb on June 8. The July NY11 sugar futures contract settled at 11.94 cents/lb on June 8, proving a 1.17 cents/lb premium to hydrous ethanol in raw sugar equivalent.

Recoverable sugar per ton of sugar cane, or ATR, is expected to be 134 kg/mt, an increase of 6.6% year on year.

Of the 11 analysts surveyed, the largest producer estimated the total cane crush would be 42.2 million mt.

Total ethanol output from sugar cane is expected to be 1,743 million liters, a decrease of 19.6% year on year.

Hydrous ethanol output was expected to be 1.189 billion liters, according to the average of the analysts' responses to the survey. This would be a decrease of 15.9% year on year. Anhydrous ethanol output in H2 May was expected to be 555 million liters, a decrease of 21.2% year on year.