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CS Brazil's H1 June sugar output likely double on year on weather: Platts survey

Sao Paulo — Sugar production in Brazil's key Center-South region in the first half of June is expected at nearly 2.43 million mt, up 102% on the year and up 38.4% from the second half of May, an S&P Global Platts survey of analysts showed Monday.

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The forecast jump comes on the back of drier weather in H1 that was more favorable for harvesting than in the comparison periods.

According to the analysts' estimates, an average of nearly 1.4 days of crushing were lost to rains in H1 June, compared with roughly 6.5 days a year ago and 5.4 days in H2 May.

To produce sugar, mills used 48.7% of the 41.18 million mt of the cane crushed in H1 June, the survey showed. That compared with 40.73% of the 25.99 million mt of cane crushed over the same period last year.



The balance of the cane, or 51.3%, was expected to have been used to produce 1.57 billion liters of ethanol, up 46% on the year. Hydrous is expected to have accounted for 56% and anhydrous for the balance.

Wider analyst expectations for the cane crush ranged from 39 million mt to 44.8 million mt. The consensus for cane's total recoverable sugar, or ATR, was 127.13 kg/mt in H1 June, with a wider range of 123.2-132.3 kg/mt.

Even with a higher H1 June crush, total cane crushed so far this season has still lagged the same period last year.

Taking into account the average poll results for crushing, the accumulated volume since the season began (April 1) through June 16 is expected to be 9% lower than last year at 153 million mt, the survey showed. ATR for the period was expected at 127.8 kg/mt, compared with 121.84 kg/mt a year earlier.

Cumulative sugar production, however, was expected just 1% lower on year at 8.12 million mt, amid a higher proportion of cane allocated to sugar so far this season.

Kingsman, the agricultural analysis unit of S&P Global Platts, forecast the H1 June cane crush at 40.2 million mt.

"Sugar production [will] set a new fortnightly record for this season due to a high sugar mix level and good crushing volumes," said Kingsman analyst Claudiu Covrig.

Sugar production is expected at 2.39 million mt, while ATR is expected to have reached 128 kg/mt of cane, according to Covrig.

In Parana state, one of the sugarcane producing regions in CS Brazil, the amount of cane crushed in H1 June declined 29% on the year to 1.2 million mt, according to local industry association Alcopar. Rains caused halts in harvesting and hampered the crush.

The ATR in the state was 138.77 kg/mt of cane, up 13.57 kg/mt from H2 May and up 19.15 kg/mt from H1 June 2016.


ETHANOL SALES SEEN HIGHER THAN H2 MAY


Kingsman forecast total sales of fuel and industrial ethanol in the CS Brazil domestic market -- anhydrous plus hydrous -- in H1 June at approximately 1.15 billion liters, compared with 1.055 billion liters in H2 May and 1.05 billion liters in H1 June 2016.

The expected rise in sales reflects higher hydrous demand at the pump, as prices in the main consumer state Sao Paulo have been competitive.

Over June 1-22, hydrous prices in the state averaged 68.2% of gasoline prices, compared with 69.5% in May, data from the National Petroleum Agency showed.

In Mato Grosso, prices averaged 63%. Prices in two other large states, Goias and Minas Gerais, had a combined average of 71.5%.

Hydrous fuel, which is used in flex-fuel vehicles, competes with gasoline at the pump and is competitive when its price is at most 70% of gasoline prices due to its energy content.

Gasoline has 30% more energy content than hydrous. Anhydrous ethanol is blended with gasoline under a 27% national mandate.

Both products are also used in industry. Industry association UNICA said Monday it would release its official production figures just after its ethanol summit, now underway in Sao Paulo. The summit runs through Tuesday.

Table: CS Brazil sugarcane production quota

--Alessandra Rosete, alessandra.rosete@spglobal.com
--Edited by Lisa Miller, lisa.miller@spglobal.com

[Corrects to 2.43 mil mt from 2.45 mil mt in the first paragraph, and also corrects to 102% from 104% and to 38.4% from 40%. In seventh paragraph, corrects to 8.12 mil mt from 8.15 mil mt. In 10th paragraph, corrects to 2.39 mil mt from 2.68 mil mt.]