Brazil Sugar Production Falls 52.31%: Unica

By IndraStra Global News Team

On April 25, 2019, Unica (Brazilian Sugarcane Industry Association) released latest data — according to which — sugar production in Brazil’s center-south region fell 52.31% in the first half of April to 340,000 mt, missing both year-ago production of 713,000 mt and analyst estimates of 436,000 mt, as rains disrupted processing and mills delayed operations.

“The rains early in April hampered harvesting by mills that were already operating and delayed initial crush by those that were planning to start the crop,” Unica’s technical director Antonio de Padua Rodrigues said.

The centre-south Brazilian crop-based mills produced only 340,000 tonnes in the first half of April when they crushed 13.865 million mt of cane or 37.99%  less than in the same period a year earlier. This year-on-year drop missed analyst expectations of 16.5 million mt crushed. Mills allocated only 23 percent of cane to sugar production early in April versus 31 percent last year, Unica said. 

Also, Ethanol production fell less, 26 percent, to 737 million liters of which 74 million liters were anhydrous and the remaining 662 million liters hydrous. Total ethanol production was down 26.19% from H1 April 2018 levels. Hydrous and anhydrous ethanol output both missed analyst estimates of 699 million liters and 124 million liters, respectively.

Sales of hydrous ethanol, the fuel that competes directly with gasoline at pumps for car owners’ preference, rose 44% in the first half of April compared with last year, as the country uses hydrous ethanol as a stand-alone fuel in flexible-fuel vehicles (FFVs), competing directly with gasoline.

According to Unica, 

Domestic hydrous ethanol sales rose slightly to 863.17 million liters for the crop year, versus 852.35 million in the previous year. Another 925,000 liters were exported abroad.  

Domestic anhydrous ethanol sales fell slightly year on year, to 306.02 million liters versus 323.92 million liters in the previous crop. Another 5.99 million liters were exported abroad. 

According to ICIS, many Brazilian drivers own FFVs, which allows switching from gasoline to ethanol. Drivers substitute for ethanol only if its price is less than 70% that of gasoline. But, in the last few weeks, some fuel distributors had reduced their ethanol stocks, waiting for lower prices at the beginning of the crop, but had to cover positions at the last minute as mills delayed production. Unica said that 64 mills rescheduled the start of operations for the second half of the month because they were unable to start in the first two weeks of April, officially the first month of the 2019/20 crop.

In the first three weeks of April, the prices of hydrous ethanol jumped 25% in Sao Paulo state 

With Reporting by ICIS,  Reuters, S&P Global and UNICA