The volume of sugarcane crushed by Center-South producers totaled 467 million tons April 1-Oct. 1, a drop of 6.86% on year, according to data released by industry association UNICA Oct. 13.
In the last two weeks of September, 35.78 million tons were crushed, down 11.38% on year.
Most of the production drop can be attributed to losses in the agricultural yield, which was hampered by the severe dry weather of the last two years and the three waves of frost reaching the main producing states in the third quarter of 2021, resulting in an average of 58.2 tons of cane harvested per hectare planted, a plunge of 21.3% from the 74 tons harvested in the same period of 2020.
Considering the reduced cane availability to be crushed in the CS crop season 2021-22, 36 plants had already finished their crop season, leaving 225 plants still operating until Oct. 1. UNICA estimated that a further 52 units would finish the crushing season in the first 15 days of October.
According to UNICA's technical director, considering the reduced sugarcane availability, it was already expected that some producers would shut down crushing activities earlier than usual.
Sugar and ethanol production
The high premium to export sugar over ethanol prices in the domestic market has been encouraging CS producers to favor sugar production since the prior crop cycle of 2020-21, and this scenario is not expected to change in the 2022-23 crop cycle, starting April 1, 2022.
Sugar produced in 2H September was at 2.3 million tons, a plunge of 19.09% year on year, while the accumulated volume so far in the 2021-22 crop was at 29.18 million tons, down 8.95% year on year.
According to S&P Global Platts' calculations, in the last two weeks of September sugar exports brought on average Real 104/ton more than hydrous ethanol in the domestic market, despite the recent ethanol price spike across the country.
Regarding ethanol production, producers followed the same strategy observed since September 2020 and maximized anhydrous production to guarantee supply security to keep with the 27% mandatory blend in gasoline.
Anhydrous production in 2H September added 847 million liters, up 8.24% year on year, while the accumulated volume of the 2021-22 crop was at 8.89 billion liters, a surge of 24.43% year on year.
In the opposite direction, hydrous ethanol production in 2H September was at 1.13 billion liters, down 18.19% year on year, and the accumulated volume reached 13.89 billion liters, a drop of 15.37% year on year.
Platts assessed the anhydrous ethanol premium over hydrous in the spot market at an average of 15.1% in the last two weeks of September, down from 17.1% in the first two weeks of the month.
Total ethanol sales reported by CS producers in September were at 2.46 billion liters, a drop of 15.02% year on year, with 2.26 billion liters supplying the domestic demand and the balance of 194 million liters exported.
In the domestic market, hydrous ethanol sales reached 1.31 billion liters, sinking 25.32% year on year but slightly above the 1.2 billion liters estimated by a few sources as the safety level to guarantee that the current stocks, plus the production estimated for the upcoming months, will be enough to supply the domestic market until the next crop cycle.
Anhydrous ethanol sales in September increased 19.81% year on year to 954.2 million liters.
From April 1 to Oct. 1, CS producers sold 14.75 billion liters of ethanol, with 13.82 billion liters to supply the domestic market. Considering domestic sales, anhydrous ethanol sales totaled 5.15 billion liters, up 3.87% year on year, and hydrous 8.67 billion liters, a drop of 5.62% year on year.