Mills in Brazil’s key Centre South region got the second quarter of their crushing season off to a stronger-than-expected start, helped by reviving cane yields and quality, as well as dry harvesting weather.
Centre South mills, which crush more than 90% of Brazil’s cane, produced 2.98m tonnes of sugar in the first half of July, according to industry group Unica.
That figure was nearly 500,000 tonnes more than produced in the previous half month and, for the first time this crushing season, which started in April, in line with the year-before result.
Output also exceeded market expectations of a 2.84-tonne number, as reported by S&P Global Commodity Insights following a survey of analysts.
The larger-than-expected sugar output for the first half of this month reflected in part a rapid cane crush which, spurred by dry weather, reached 46.35m tonnes,
That narrowly exceeded the year-before performance, while beating comfortably the 44.8m-tonne result expected by analysts.
After three months when processing volumes fell below 2021-22 levels, “in the first fortnight of July there was an equalisation of the amount of cane processed”, said Antonio de Padua Rodrigues, the Unica technical director.
As S&P Global noted earlier this week, “weather in the Centre South was favourable for crushing during the first half of July, with less than one day expected lost to rain and about 255 mills active as of July 16”.
Sugar vs ethanol
However, Unica highlighted too cane yield improvement, with latest data from the sugar cane technology centre, CTC, showing a figure of 77.5 tonnes per hectare, narrowing to 0.5% the year-on-year decline.
Furthermore, the quality of harvested cane rose, producing 143.2 kilogrammes of sugars per tonne of cane in the first half of July, down only 0.3% year on year.
The average cane sugar level for 2022-23 cane is 3.3% behind the year-ago level.
Mills also directed extra cane into making sugar rather than ethanol, reflecting relative economics, and with Brazilian sugar indeed having improved its export credentials, as Cepea noted last week.
S&P Global said ahead of Wednesday’s report: “Brazilian producers took advantage of the recent high price of ethanol during the early stages of the harvest, but now mills are expected to start shifting more of their cane crush toward sugar production.”
Unica added that should the cane yield continue to revive, mills may be forced to extend their crushing operations, which typically tail off around November, when rainfall levels tend to seasonally increase in the Centre South.
Assuming that the year-on-year yield decline continues to narrow, “so that there is a full recovery of the crushing and, perhaps, an increase in relation to the previous agricultural cycle, it will be necessary to lengthen the harvest period”, the industry group said.
New York raw sugar futures for October stood 0.6% lower at 17.37 cents a pound in late deals, earlier hitting a fresh one-year low of 17.32 cents a pound.
London white sugar futures for October settled £0.20 higher at £510.20 a tonne.