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H1 May Center-South Brazil sugar production to surge 53% on year: survey

22 May 2020

 

Sugar production in the first half of May in Brazil's key Center-South region is expected to total 2.461 million mt, a spike of 53% year on year, according to the consensus expectations of analysts surveyed by S&P Global Platts Thursday.Brazilian producers have been testing the industry's limits on the maximum sugar output possible amid high prices for the sweetener in the international market, a depreciation by the Brazilian Real against the US dollar and weak fuel ethanol demand.The amount of sugarcane crushed in the first half of May is expected to total 41.5 million mt, up 6.35% year on year, according to the survey consensus. If this forecast proves to be right, the cumulative cane crush in the first 45 days of the 2020-21 crop will reach 101.88 million mt.

 

The crush pace was not hampered by the spread of the coronavirus pandemic in Brazil, which initially raised concerns about possible disruptions, with dry weather conditions still favoring a fast harvest pace.In the 11 analysts surveyed, three trading houses estimated total cane crush to top 42 million mt, while the entire range of the analysts' expectations was 40.4 million mt to 43.4 million mt.Industry association UNICA is expected to release its official production figures in the coming days.The analysts surveyed by Platts expected an average of just half a day to be lost to rain in H1 May.

 

The cane's total recoverable sugar (ATR) was expected to rise to 127.1 kg/mt from 119.75 kg/mt in H1 May 2019. Among the analysts surveyed by Platts, expectations ranged between 122 kg/mt and 132 kg/mt.The proportion of cane used for sugar production in the Center-South in H1 May was expected to have surged to 47.5% from 36.02% a year ago, according to the survey. The jump in the share was due to higher export sugar prices at the same time as a steep decrease in ethanol prices in the domestic market.

 

Platts assessed hydrous ethanol converted in raw sugar equivalent at 8.22 cents/lb on Wednesday, while the ICE NY11 sugar futures market settled at 11.19 cents/lb, for an export premium of 2.97 cents/lb, or $65.48/mt, over domestic hydrous ethanol. With the recent depreciation of the Real, Brazilian producers would receive a premium of roughly Real 373/mt compared with the spot market to export sugar.Although the ethanol mix was expected to dramatically fall from 63.98% to 52.5%, the additional volume of cane crushed and higher ATR is expected to minimize the drop in the total volume of ethanol production in just 5.9% to 1.65 billion liters.Production of hydrous ethanol, which is used as standalone E100 biofuel in Brazil, was expected to have fallen 8.6% year on year to 1.11 billion liters in H1 May, while anhydrous ethanol output in the period was expected to reach 543 million liters, roughly unchanged year on year.

 

Source: https://www.spglobal.com/pl

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