Brazil's Center-South sugar output set to shrink 67%

Sugar production in the second half of November in Brazil's key Center-South region is expected to total 142,000 tonnes, a 67% drop from the same time a year ago.

It is reported by S&P Global Platts.

Reduced sugar production can be mostly attributed to the second consecutive year of below-average rainfall in the region, as well as frost and a lack of renew in the planting area, which all combined resulted in a drop in the agricultural yield and volume of cane crushed.

Market participants estimated that most producers from the region will conclude the 2021-22 crushing season in mid-November.

According to the survey, the ATR — recoverable sugar per ton of sugarcane — is also expected to fall to 131,3 kg/t in H2 November from 146,38 kg/t in H2 November 2020. Although the volume shows a considerable drop year on year, the expectation was still within the five-year average 134,64 kg/t.

The amount of sugarcane crushed in H2 November is expected to total 3,4 million tonnes, down 61,4% from the prior-year period, according to the survey. If analyst estimates prove correct, it will be the lowest volume of sugarcane crushed in any H2 November since the 2002-03 crop, when 1,97 million tonnes were crushed in the same period.

Considering the estimated crush for the two weeks period, the cumulative cane crush of the 2021-22 crop will be up to 520,37 million tonnes, down 12.53% from the same period of 2020.

The proportion of cane used for sugar production in CS Brazil in H2 November is expected to be below the prior year at 33,5% from 35,4% in 2020, according to the survey.

Strong market concerns about ethanol availability and the steady upward price movement of the biofuel could be the main reasons driving the sugar mix decision in the period.

Despite the punctual lower sugar mix on year, CS producers are expected to keep maximizing sugar production in the next CS crop 2022-23, as the sweetener is still paying a premium in the export market over hydrous ethanol in the domestic market.

Combining the expected lower volume of cane crushed and ATR, with a slight increase in the ethanol mix to 66,5% from 64,6% in the year-ago period, the total volume of cane ethanol produced is expected to plunge 68,9% on the year to 232 million liters.

Production of hydrous ethanol — used as a standalone E100 biofuel in Brazil — is expected at 123 million liters in H2 November, down 49,8% on year, while anhydrous ethanol output during the period is expected to reach 110 million liters, down 68,8% on year.