CS Brazil H1 July sugar production expected to fall 4.7% on year: survey

Sugar production in the key Center-South Brazil region is expected to total 2.8 million mt in the first half of July, reflecting a decrease of 4.7% on the year, an S&P Global Commodity Insights survey of 13 analysts showed July 26.

During the survey, the cane crush estimate ranged from 42.5 million mt to 46.7 million mt. The average estimate was for a total cane crush of 44.8 million mt, a 2.9% decrease on the year.

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

The proportion of cane used for sugar production is expected to be 47.2%, unchanged from 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 16.33 cents/lb on July 25, according to S&P Global data. The October NY11 sugar futures contract settled July 25 at 17.47 cents/lb, reflecting a 1.14 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 0.35 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 141.1 kg/mt, a decrease of 1.8% on the year.

Total ethanol output from sugar cane is expected to be 2.13 billion liters in H1 July, down 2.6% on the year.

Hydrous ethanol output was expected to be 1.38 billion liters, according to the average of the analysts' responses to the survey. This would be an increase of 6.6% on the year. Anhydrous ethanol output in H1 July was expected to be 762 million liters, 14.3% lower on the year, according to the survey.

Industry association UNICA is expected to release its official production figures by the end of this week.

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

*corn ethanol included

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

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