Center-South Brazil H2 October sugar production seen rising 11% on year: survey

Lima — Sugar production in Brazil's Center-South is expected to total 1.684 million mt in the second half of October, an increase of 11% on the year, an S&P Global Platts survey of 11 analysts showed Nov. 9.

Of the 11 analysts surveyed, the two largest producers estimated the total cane crush would be between 22 million mt and 27.4 million mt. The total cane crush recorded in H2 October 2019 was 36.5 million mt.

"The reduction in the cane crush for H2 October was due to more days lost to rain compared to the same period in 2019," said a Sao Paulo-based trader.

"Additionally the reduction in cane crush was because more mills ended their season earlier compared to last year due to a faster pace of crushing."

An estimated 2.8 days were lost to rain in H2 October, and 210-225 mills were active as of Nov. 1, according to analysts' estimates.

"Mills continued to maximize sugar production in H2 October mainly due to better profitability of sugar against ethanol with the sugar premium over ethanol staying well above 300 points for most of October," said another Sao Paulo-based trader. "The combination of higher prices in New York No. 11 sugar futures and a weaker Brazilian real were the primary drivers for the elevated premium for sugar production."

Platts assessed hydrous ethanol ex-mill Ribeirao Preto converted into raw sugar equivalent at 11.67 cents/lb on Nov. 9. The March New York contract settled at 14.88 cents/lb on Nov. 9, meaning a 3.21 cents/lb premium to hydrous ethanol in raw sugar equivalent.

Recoverable sugar, or ATR, is expected to be 155.2 kg/mt, an increase of 2.3% year on year. Sufficient rainfall over the summer and consistently dry weather in CS Brazil since April 1 have allowed the cane to develop well and have a high sucrose concentration.

The proportion of cane used for sugar production is expected to be 44%, up from 32% a year earlier, according to analysts' estimates.

Total ethanol output from sugar cane during H2 October is expected to be 1.335 billion liters, a decrease of 32.8% year on year.

Hydrous ethanol output was expected to be 846 million liters, according to the average of the analysts' responses to the survey. This would be a decrease of 37.8% year on year. Anhydrous ethanol output in H2 October was expected to be 489 million liters, a decrease of 21.9%.