Dec 4 / Lívea Coda

Crop Forecast: Sugar Center-South - 2023 12 04

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"With cumulative cane yields remaining above 89t/ha in October 2023, the total raw material can be estimated as high as 655Mt for the 23/24 crop season – or even more! "

Center-South Cane, Sugar, and Ethanol Production Update

Before discussing our latest figures, it is important to talk about our forecast methodology. To best estimate cane volume, we update our expectations for area growth, yields and cane quality, considering key market sources such as Unica, MAPA, and Conab as well as realized weather, NDVI measurements and historical trends.

From cane availability, we draw sugar production. First, will mills be able to crush? Precipitation might induce lost days and slow crushing down. The second step is understanding mills optimization problem: sugar or ethanol? Sugar mix is set depending on which subproduct pays more.

23/24 crop year

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For Instance, with cumulative cane yields remaining above 89t/ha in October 2023, the total raw material can be estimated as high as 655Mt for the 23/24 crop season – or even more! The only thing on the millers’ way is the weather: as the region approaches summer, precipitation becomes abundant. Accounting for another two or three good-paced fortnights, the region is set to crush around 645Mt by March’s end. This also implies good prospects for 24/25 – if summer rains are close to average, Center-South could be heading to a second year of higher availability.

Image 1: Center-South – Area and Yield

Source: Unica, Conab, Mapa, hEDGEpoint

Image 2: Center-South – Cane Availability (Mt) 

Source: Unica, Conab, Mapa, hEDGEpoint

Of course, mix will start to melt with all the predicted rains and lower cane quality during intercrop. However, final figures can still reach a quite sugary result. With around 139.2kg/t and 48.7% being redirected to sugar, the region can produce 41.6Mt of the sweetener, 1.1Mt more than our previous estimate for the current season. 

Image 3: Cumulative Cane Yields Estimate (t/ha)

Source: UNICA, Conab, hEDGEpoint

Image 4: Crop Summary

Source: hEDGEpoint

Although sugar mix is expected to be extremely high, cane availability also guarantees an abundance of ethanol. We expect that anhydrous production will reach 13.6B liters, while hydrous nearly 19.5B liters – pushing ending stocks to a higher level while preventing price reaction.

With a high mix, induced by ethanol competitiveness loss against sugar, Center-South will be able to reach a new production record at 41.7Mt. This trend eases short-term tightness and contributes to possibly lower international prices.

Image 5: Center South Sugar Balance (Apr-Mar Mt tq)

Source: Unica, MAPA, SECEX, Williams, hEDGEpoint

Crop Forecast - Sugar and Ethanol

Written by Lívea Coda
Reviewed by Natália Gandolphi


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