Brazil Sugar Output in Center South to Climb 17%

Sugar output in Brazil’s Center South, the world’s biggest-producing region, will rise 17 percent this year after growers increased cane planting and prices for the sweetener rose.

Production in the region, which is composed of eight states and makes more than 80 percent of Brazil’s sugar, will rise to 31.2 million metric tons in the current harvest from 26.7 million tons last year, the Center South Sugar and Ethanol Industry Association, known as Unica, said today in a statement. Rising international sugar prices and a weaker Brazilian currency against the dollar have made sugar exports more profitable than cane-based ethanol sales in the domestic market, said Marcos Jank, president of Unica.

“Currently it’s worth it to make more sugar than ethanol for mills that have that flexibility,” Jank told reporters today in Sao Paulo.

Sugar has risen 18 percent over the past 12 months on the outlook that supplies will decline in India, the biggest producer after Brazil. Export profits have also climbed for Brazilian producers as the real has fallen 29 percent against the dollar since a nine-year high on Aug. 1.

Still, most new mills were designed to produce just ethanol, limiting the industry’s ability to use more cane to make sweetener, Jank said. Of the 23 new mills Unica expects to open this year, 19 will focus just on ethanol and electricity generation from burning bagasse, as the fibrous residue from crushed cane in known.

Sugar Vs. Ethanol

Mills will turn 42.1 percent of their cane into sweetener this year, up from 39.5 percent in the past season. The rest will be turned into ethanol.

India, the world’s biggest consumer of sugar, will import about 2 million tons of Brazil’s increased output, Jank said. The South Asian nation will import sweetener for a second year during the season that starts Oct. 1 as output declines, Vivek Saraogi, managing director of Balrampur Chini Mills Ltd., told analysts today in a conference call. Balrampur is India’s second-biggest mill.

Brazilian output of ethanol will climb to 26.3 billion liters (6.9 billion gallons), from 25.1 billion liters. Mills will sell 83 percent of that in the domestic market to power Brazil’s so-called flex-fuel cars, which can run just on ethanol or any blend with gasoline.

Sugar-cane growers in the Center South will reap a record 550 million tons of sugar cane in the current season, up from 505 million tons in the past crop, Unica said. Harvesting usually runs from April through November.

Next year, the region’s sugar-cane harvest will rise to 585 million tons, Unica said. Unica still doesn’t have a forecast for sugar and ethanol output next year.

Brazil’s Center South comprises the southeastern states of Sao Paulo, Minas Gerais, Espirito Santo and Rio de Janeiro; the southern state of Parana; and the center-western states of Mato Grosso, Mato Grosso do Sul and Goias.

source: bloomberg