Sao Paulo — The sugar cane crush in the key Center-South Brazil region is expected to total 19.77 million mt in the first half of November, a decrease of 7.9% year on year, an S&P Global Platts survey of analysts showed Monday.
Recoverable sugar per ton of sugar cane, or ATR, is expected to be 143.1 kg/mt, an increase of 12.6% year on year.
The proportion of cane used for sugar production is expected to be 29.34%, down from 34.09% a year earlier. Brazilian producers are expected to continue to favor ethanol production over sugar, given the increased profitability of ethanol production over sugar production.
"Talking about the sugar mix, we expect it to be reported further down in the following UNICA report for H1 November and drop from 32.14% recorded for H2 October to about 29.3% (down 4.7 percentage points on the year). The same shall happen with the ATR that now is on a downtrend even if the drop shall not be as big as witnessed in the previous years, mainly due to dryness. We therefore expect the ATR to drop about 6 kg/mt from the previous fortnight at 145.5 kg/mt (up 18.1 kg/mt on the year)," said Claudiu Covrig, senior sugar analyst with S&P Global Platts Analytics.
Analysts' estimates for sugar production was expected to total 788 million mt in H1 November, a decrease of 11% year on year.
"As 57 more mills were expected to close their activities during H1 November bringing the total for the season to 124 units (this compares to just about 86 units closed at the same time last year) we expect a low volume of cane to have been crushed. We therefore estimate the cane crush at 18.4 million mt down 14.2 million on the previous fortnight and down 2.9 million mt on the year bringing the sugar production to 747,000 mt, about 133,000 mt down on the year," Claudiu said.
Of the 10 analysts surveyed, the largest producer estimated the total cane crush would be 19.6 million mt.
Platts assessed hydrous ethanol ex-mill Ribeirao Preto converted into raw sugar equivalent at 14.13 cents/lb Friday. The March NY11 sugar futures contract settled Friday at 12.83 cents/lb, proving a 1.30 cents/lb discount to hydrous ethanol in raw sugar equivalent.
Total ethanol output from sugar cane is expected to be 1.206 billion liters, an increase of 14.1% year on year.
Hydrous ethanol output was expected to be 836 billion liters, according to the average of the analysts' responses to the survey. This would be an increase of 17.6% year on year. Anhydrous ethanol output in H1 November was expected to be 370 million liters, an increase of 6.9% year on year.
Strong consumer demand for hydrous ethanol at the pump has been supporting hydrous ethanol prices. The ethanol to gasoline price parity at the pump still favors ethanol consumption, especially in the larger states such as Sao Paulo. Platts assessed hydrous ethanol ex-mill Ribeirao Preto at Real 2,345/cu m Monday, 14.95% higher on the year.
-- Phillip Herring, firstname.lastname@example.org
-- Claudiu Covrig, email@example.com
-- Edited by Kshitiz Goliya, firstname.lastname@example.org