This year’s loss may be next year’s gain – at least, in terms of sugar production in Brazil’s key Centre South.
The region, responsible for some 90% of sugar output in the world’s top producing country, looks to be heading for a disappointing finish to this season’s output, thanks to heavy rains slowing the cane harvest.
(All but 2% of Centre South cane is now reaped mechanically.)
Czarnikow, citing rain delays, on Friday cut its Centre South sugar production forecast to 32.5m tonnes, up only some 400,000 tonnes year on year, and hinted at the potential for further downgrades if wet weather continues.
However, that may bode well for cane volumes, and sugar output, in 2023-24 as starts next April.
Mills may get off to a flying start to next season’s crush, if rains force them to leave some of this year’s cane in the field.
(The boost from this carryover, or so-called “bisada”, cane would represent a marked contrast from this season, when many mills delayed reopening to allow crops damaged by frost and drought a greater time to recover.)
And there is a good chance they may have more cane to play with thereafter too.
The rains which are snarling up the current harvest, and potentially watering down sugar levels in cane, bode well for next season’s in-field yields.
Some have talked of a cane harvest of 600m tonnes in 2023-24, well above levels of 550m tonnes or so expected for this season.
Not all of that extra cane will go into producing sugar, of course.
The appeal to mills making ethanol instead from their cane may grow if energy prices rise – either under international pressures, from higher oil prices, or local ones.
A new Brazilian president might, for instance, reinstate fuel taxes on gasoline, so boosting ethanol prices and making the biofuel that much more financially attractive to mills, compared with sugar.
Still, Centre South sugar output prospects for next season currently look more promising that this one.
That has already been reflected in futures prices, in terms of New York’s spot March 2023 raw sugar contract expanding its premium markedly over further ahead contracts over the past month.
That process has scope to go a little bit further, depending on how wet the Centre South proves over the next few weeks.