Sugarcane crush volumes in the key Center-South region of Brazil in the first half June are expected to total 41.42 million mt, with mills focused on ethanol production, a Platts survey of analysts showed Monday.
The range of analysts’ expectations for cane crush spanned from 40.5 million-42.5 million mt. Brazilian sugarcane industry group UNICA is expected to release its bimonthly sugarcane harvest data Tuesday.
Claudiu Covrig, an analyst at Kingsman, forecast cane crush within the analysts’ consensus at 41.4 million mt and cane yield measured by total recoverable sugar (or ATR) at 128.85-125 kg/mt, about 3.8 kg/mt higher compared to the previous fortnight as dry weather should have helped the cane to build up sucrose. Kingsman is the agricultural analysis unit of Platts.
In terms of sugar mix expectations, Covrig said he sees only a small recovery, with sugar mix probably at 42.4%, up from 41.2% in the previous fortnight. Hydrous ethanol continued to pay better than sugar, with sellers interested firstly in the cash spot ethanol market.
“Generally speaking as we advance into the harvest and approach the peak of the crop, we should see more sucrose diverted to sugar production but actual global sugar prices which are below production costs even in the most efficient producer (now CS Brazil) are leading Brazilian producers to limit their increase in the sugar mix,” Covrig said.
As a comparison, last season H1 June was characterized by a 45.2% sugar mix, about 2.8% more than Kingsman’s expectation for the same period this year.
The poll showed analysts expect sugar mills to have focused on ethanol production, with ethanol representing 57.84% of the cane crush in the June 1-15 period, with sugar at 42.16%.
An average of analysts’ expectations points to the following: sugar production of 2.14 million mt and total ethanol output of almost 1.8 billion liters, with hydrous ethanol output remaining over 1 billion liters. Anhydrous ethanol production should recover to some 700 million liters, the highest so far this season.
The focus on ethanol production, particularly on hydrous, is explained by the need to satisfy increasing demand from flex-fuel drivers for the standalone biofuel and the need for mills to capitalize faster.