The heavy rains which hampered cane harvesting in Brazil’s Centre South last month, and the potential for more wetness to come, have cut 700,000 tonnes from sugar output prospects, Czarnikow said.
The downgrade could tip the world into its sugar production decline in three years, when the commodities trader in early November releases its monthly update on world supply and demand estimates.
The group said that it now expected the Centre South to produce 32.5m tonnes of sugar in 2022-23, as started in April – below a previous forecast of 33.2m tonnes, if above the 32.1m tonnes produced last season.
Some other commentators have factored in production estimates of 34m tonnes or more.
‘Add to risks’
Czarnikow hinted at the potential for a further downgrade, if rainfall continues to hamper fieldwork.
As of the end of last month, “the region has made 2.8m tonnes less sugar than it did this time last year and may only surpass last year’s production as late as November”, the trader said.
“Even this isn’t guaranteed – mills are relying on the weather in [the October-to-December period] being in line with historical averages or drier than usual.”
In fact, the return of La Nina will only “add to risks” for mills, in its potential for inspiring further rains.
“Whatever the mills’ intentions might be, above-average rains from now on would not only hinder operations but would also decrease sucrose (ATR) levels in the cane.
“This might force mills to allocate more cane towards ethanol once more as poor-quality cane is more suited to making ethanol than sugar.”
‘This is a problem’
The comments follow the release by Unica earlier this week of data showing that inundations slowed Centre South sugar production in the second half of September t0 1.70m tonnes – down 41% on output in the first half of last month, and 27% lower year on year.
“Sugar production for the region was 600,000 tonnes lower than it would have been if the weather was normal,” Czarnikow said.
“This is a problem because the cane harvest in Centre South Brazil is already running behind schedule,” with many mills having delayed the start of their 2022-23 crushing season to allow more time for the development of cane which had been stunted by dryness and frost.
To attempt to catch up, “many mills will… extend their cane crush deep into December, when the rainy season is underway”.
Seasonal shutdowns which typically ramp up next month, thanks to the typically turn wetter in the weather.
Even so, there is a risk that “not all sugar cane will be crushed this season”.
At a global level, Czarnikow earlier this month forecast a “small” world production surplus of 3.6m tonnes, based on an estimate of global output holding steady year on year at 179.9m tonnes.
Consumption was estimated expanding by 2.7m tonnes to 176.3m tonnes.
For analysis of Brazil’s sugar production prospects, click here.