Brazil Area’s Sugar Cane Forecast Raised 2.4% by Kingsman

(Businessweek) – The sugar-cane crop in Brazil’s center south, the main growing region of the biggest producer, will be 2.4 percent higher than previously estimated as dry weather helped speed up harvesting, according to Kingsman SA.

Cane processing will be 512 million metric tons in the 2012-13 season under way there, the Lausanne, Switzerland-based broker and researcher said in a report dated today. That compares with a previous forecast for 500 million tons. Output in the area fell for the first time in a decade in 2011-12 to 493.3 million tons, according to industry group Unica.

“The extraordinary wet months of May and June that delayed the start are now behind us and both July and August have seen significantly better harvesting conditions enabling millers to push their crushing capacity to a maximum,” Kingsman said.

Sugar production in the area will be 31.7 million tons, down from a previous forecast of 31.8 million tons, according to the report. Rains earlier this year reduced the sugar content in the cane to 134 kilograms (295 pounds) per ton, from a previous forecast of 137.5 kilograms, Kingsman said in the report. Some 48.5 percent of all the cane processed will be directed to sugar at the expense of ethanol, according to the researcher.

“The percentage of sucrose allocated to sugar production remains significantly higher than the average in the previous five years,” it said. “Despite the latest weakness on prices, sugar still gives mills a much better return than ethanol.”

Sugar prices have fallen 16 percent in New York this year as global supplies outpace demand. The global sweetener surplus will be 4.5 million tons in the 2012-13 season that starts in October in most countries, Armajaro Trading Group Ltd. estimates.

Ethanol Output

Ethanol output in the center south will be 20.7 billion liters (5.5 billion gallons), from a previous forecast of 20.8 billion liters, Kingsman estimates. Millers probably will leave some of this year’s cane un-harvested in order not to jeopardize the development of new plantings, according to the report.

The “El Nino weather phenomenon, even if it may be a weak one, is threatening early spring rains and there is still a risk of a difficult late harvest,” Kingsman said.

El Nino is a warming of the waters of the Pacific Ocean which usually brings above-average rainfall to Brazil’s center south. The weather pattern is usually associated with lower output in the region. Climate indicators in the tropical Pacific Ocean remain close to El Nino thresholds, Australia’s Bureau of Meteorology said on its website on Aug. 14.

To contact the reporter on this story: Isis Almeida in London at  Ialmeida3@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at  Ccarpenter2@bloomberg.net.