Center-South Brazil H2 August Sugar Cane Crush Seen Up 9.6% on Year: Survey

(S&P Global) – The sugar cane crush in the key Center-South Brazil region is expected to total 47.68 million mt in the second half of August, an increase of 9.6% year on year, an S&P Global Platts survey of analysts showed Monday.

Of the nine analysts surveyed, a large producer estimated the total cane crush would be higher than 48 million mt.

“The crushing in CS was mostly uninterrupted during the last 16 days of August. We wouldn’t be surprised to see even higher crushing volumes in the official release,” the analyst said.

The proportion of cane used for sugar production is expected to be 36.52%, down from 37.64% a year earlier. Brazilian producers are expected to maintain the trend so far this season and keep favoring ethanol production over sugar.

Platts assessed hydrous ethanol ex-mill Ribeirao Preto converted into raw sugar equivalent at 13.09 cents/lb Friday, while the same day Platts assessed VHP sugar, FOB Santos for September shipment, at 10.83 cents/lb, showing hydrous ethanol was paying 226 points, or $49.82/mt, more than raw sugar at that point.

Analysts surveyed by Platts said that roughly half a day of crushing was lost to rain. Most were considering stops for maintenance after a long period of dry weather and no crushing stops in the first two weeks of August.

“Our expectations for CS Brazil don’t provide the bulls with much reason to wake from their lethargic state,” said Claudiu Covrig, senior analyst from S&P Global Platts Analytics.

Rains for H2 August were reported at just 3 mm, 84% below norms, as measured at weather stations monitored by MDA Weather Services. Platts analytics estimated 0.2 day lost to rain during the last 16 days of August, against two days lost at the same time last year.

Despite the dry weather, expectations for the cane’s total recoverable sugar, or ATR, came in at 149 kg/mt, or 2.4% below 152.6 kg/mt a year earlier.

Platts Analytics estimated ATR at 149.6 kg/mt.

“Although this would still be 3.1 kg/mt lower year on year, it will be a new high for a fortnight this year,” Covrig said.

Sugar production was expected to total 2.474 million mt in H2 August, an increase of 4% year on year. Even with a higher production from the same period of 2018, it would mean cumulative sugar production of 17.931 million mt since April 1, still down 911 million mt from a year earlier.

With more cane being moved toward ethanol production, total ethanol output from sugar cane is expected to be 2.686 billion liters, up 10.2% year on year.

Hydrous ethanol output was expected to be 1.86 billion liters, according to the average of the analysts’ responses to the survey. This would be an increase of 11.6% year on year. Anhydrous ethanol output in H2 August was expected to be 822 million liters, up 7.2% from second half of August in 2018.

Despite the higher ethanol output, steady hydrous ethanol demand has been supporting hydrous ethanol prices. Platts assessed hydrous ethanol ex-mill Ribeirao Preto at Real 2,100/cu m Friday, 1.45% higher year on year.