Brazilian cane mills ramped up early-season crushings faster than had been expected, despite the lower quality of crop, Unica said, crediting the acceleration to the appeal of ethanol.
Mills in Brazil’s Centre South, which is responsible for more than 90% of the country’s sugar output, processed 23.82m tonnes of cane in the last half of April, down by more than 5.8m tonnes on the volume handled in same period of 2021.
However, the figure was more than four times that crushed in the first half of last month, and beat too the 21.26m-tonne figure that investors had expected, according to a poll by S&P Global Platts.
“Sugarcane crushing in the second half of April advanced and gained strength,” Unica said, nothing the “greater number of mills in operation”.
The number of plants operating as of the end of April, the first month of the Centre South’s 2022-23 crushing season, reached 180, compared with 85 in the first half of the month.
While still below the 207 which had fired back up as of the close of April last year, a further 57 are due to have started by the end of this week.
It had been expected that mills would be slower to start the 2022-23 crushing season, to allow cane further time to recover from the drought and frost damage which marred last season’s result.
Indeed, cane crops were displaying inconsistent quality, and produced last month – at 108.5 kilogrammes of sugars per tonne of cane – some 8.5 kilogrammes less than a year before.
However, mills were swayed by the clamour for ethanol, which had displayed “a heated market” in the second half of last month, said Antonio de Padua Rodrigues, the Unica technical director.
Even when relative prices should dictate extra demand for gasoline, rather than ethanol, “consumers have opted for ethanol, showing that the consumption decision is not based exclusively on price, and that environmental and public health benefits must be taken into account”, Mr Rodrigues said.
The proportion of cane turned into ethanol, rather than sugar, by Centre South mills is, at 64.6%, up 7.3 points so far this season.
Sugar vs ethanol
The region’s ethanol output in the second half of last month, at 1.09bn litres, exceeded market expectations of a 1.07bn-litre figure, if falling by 15.8% year on year.
Output of hydrous ethanol – used as an alternative to gasoline in “flex fuel” cars, rather than being blended into gasoline, like anhydrous ethanol – proved relatively resilient in falling by 10.0%.
Sugar production, at 934,000 tonnes, beat the 769,400 tonnes expected by investors, according to the S&P Global Platts poll, but was down 39% year on year.