Brazil's sugar cane sector expects the main center-south crop to yield 5.7 percent more
sugar this season, as it grapples to reverse the effects of ageing crops and persistent drought that reduced the region's output last year, its first decline in more than a decade.

Sugar output from the center-south, which accounts for 90 percent of Brazil's cane, will reach 33.1 million tonnes this April-March season, up from 31.3 million last year, industry association Unica said in its first forecast of the season.

Nearly all the added output from the region will go to sugar exports that are seen rising 8.5 percent to 24 million tonnes from 22.11 million tonnes last season, Unica said.

But as for growth in the amount of crushable cane, Unica's outlook is on the low side when compared with other forecasts of the crop that accounts for half the world's trade in sugar.

The center-south is expected to crush 509 million tonnes in the season that began in April, recovering only 3.2 percent from 493.2 million tonnes last year, Unica said. The increase is due largely to expanded area which is seen up 3 percent. Unica did
not give an absolute number for total planted area.

The government's crop supply agency Conab released its first official forecast of the cane crop on Tuesday. It sees the center-south crop at 532 million tonnes.

Continued dry weather over the cane belt and the slow pace of replanting aged cane fields will keep the output of cane per hectare at the lowest in over 20 years, Unica said.
"The growth in area crushed ought to be the determining factor, as yields (of cane/hectare) are not expected to improve," Unica said in the report released on Thursday morning.

Output of cane-based ethanol is due to rise 4.6 percent to 21.5 billion liters from last year, although the percentage of available cane allocated for will fall slightly to 51.25 percent from 51.57 percent last year as mills continue to favor sugar production.

Ethanol exports will fall to 1.7 billion liters from 1.85 billion, despite the increased output this year. Fast growth in local demand for the biofuel is the main reason that will also keep Brazil importing 500,000 liters of corn-based ethanol from
the United States, unchanged from last year, Unica estimated.

The amount of cane per hectare are expected to be little changed from last season at 68.7 tonnes. Typically, a hectare yields around 84 tonnes a year in the region, but drought, frosts, lack of replanting have sapped the crop's potential.

After the 2008 financial crisis turned dozens of the region's 450-odd mills insolvent, they stopped investing in replanting about 20 percent of their crop every year. They needed to capture the high price of sugar at the time and
generate cash flow to help offset their credit problems. Replanting takes a field out of production temporarily. The age of the cane crop began to rise, which means its yields fall quickly in fields beyond their third year of

Unica said the average age of the center-south crop dropped to just below 3.5 years this year, down slightly from last year. Optimally, the crop age should be under 3 years. But aging cane is not the only problem. Brazil is still struggling with dry weather associated with La Nina, a global weather phenomena that occurs when ocean surface temperatures off Peru drop.

Unica confirmed recent reports by meteorologists that dry weather over the crop in past months continued to hurt yields.

"In the beginning of the year, the appearance of the cane crop was very good, but intense dryness in February and March greatly hurt the growth of the plants," Unica's chief technical director Antonio de Padua Rodrigues said.

source: reuters


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