Brazil officials, relatively, upbeat on Centre South cane prospects

(Agrimoney) – The low season for Brazilian cane harvesting will prove only mildly less productive than last year,  despite the drought damage to this year’s crop, according to official data which were more generous than those from industry group Unica.

Conab, the official crop bureau, cut its forecast for the cane harvest in Brazil’s Centre South region, responsible for some 90% of domestic output by 16.8m tonnes to 599.7m tonnes.

The figure for Centre South sugar output was downgraded by 1.96m tonnes to 32.62m tonnes.

The estimated implied a drop of 3.2% in cane production this season, and a 5.2% drop in sugar output, reflecting unusually dry and persistent weather for much of calendar 2014.

The drought was particularly intense in south eastern areas of the region, where “rainfall was below the normal level since the end of last year, a shortfall reflected in the development of cane”, Conab said.

The declines were only saved being even larger “because of a 3.1% increase in planted area” of cane, the bureau said.

Sharp slowdown – or modest one?

Nonetheless, the Conab estimates were above those released on Thursday from Unica, the cane industry group, which showed the Centre South cane harvest at 567.0m tonnes, and the region’s sugar output at 31.935m tonnes.

These were, on Unica data, declines of 5.0% and 6.9% respectively – with the greater drop in sugar output a reflection of the increased proportion of cane used for making ethanol, rather than sweeteners.

The Conab data imply a far smaller drop in Centre South activity in the off season for crushing, which starts this month until March, that the Unica estimates.

Assuming Unica data on the region’s harvest, and sugar output, up to the end of November are correct, cane harvesting up to the end of 2014-15, at the end of March, will halve, to 12.9m tonnes – part of the so-called “sudden death” many commentators have forecast for volumes.

Sugar output will slump by more than 60%, to some 435,000 tonnes, over the period,

However, the Conab estimates imply a drop of only 7% in cane volumes for the rest of the season, and a 13% fall in sugar output.

‘Recovering from a severe drought’

Unica has cited behind its forecast the extent of damage to cane from drought, and the speed of harvesting fostered by dryness, meaning that many mills have run out of crop to crush.

Indeed, the number of mills closing early has increased.

However, Unica has also highlighted that a number of mills were delaying closure to enable them to take the last few tonnes of cane, after rains slowed harvesting in late November.

Conab also underlined the improved prospect for Brazil’s North East region, where the cane crop is seen coming in at 59.23m tonnes, down 233,000 tonnes on the previous estimate, but up 4.4% year on year.

“The sugar cane crop in this region s recovering from a severe drought in last two seasons,” the bureau said, highlighting the bigger production estimate despite a 4.6% drop in planted area.