Unica preparing to revise Brazil sugar estimates


Unica is preparing a long-awaited revision of its estimate for the Brazil Centre South cane crush as it revealed mixed progress in the harvest late last month, helping sugar output rise, but to levels below those a year ago.

The cane industry group said that it would at the start of September unveil a fresh forecast for the 2013-14 cane crush in the Centre South, responsible for some 90% of Brazilian sugar output, which would take account of the impact of last month's frost.

Consultancy Datagro estimated that the frost had harmed, to some degree, about 65m tonnes of uncut cane, although sugar and ethanol giant Cosan on Thursday downplayed damage to its own crops, saying that it might have lost about 100,000 tonnes at the only moll had been affected.

"Just to give perspective, we crush about 330,000 tonnes a day, so this [loss] is not relevant at all," Marcos Lutz, the Cosan chief executive, told investors.

Wide area affected

Unica technical director Antonio de Padua Rodrigues said that frost had reached "most of the cane-growing area in the south of Sao Paulo state and in the states of Parana and Mato Grosso do Sul", where it had burnt leaves and killed buds in some cane.

However, this represented only a "preliminary assessment", he said.

Unica - which in April pegged the Centre South cane harvest at 589.6m tonnes, with sugar output seen at 35.5m tonnes - has long been expected to revise its forecast, probably downward, speculation heightened by a downgrade on Thursday by Brazilian crop bureau Conab to its forecasts.

Sugar vs ethanol

The comments came as Unica revealed that Centre South mills crushed 44.3m tonnes of cane in the second half of July.

While this represented the strongest period so far in the 2013-14 season, which started in April, it was 4.4% down on the level a year before, and reflected some setbacks to poor weather, which included rain as well as frost.

Separately, Rabobank said: "Harvest conditions across Brazil's Centre South production region were far from ideal in July, with wet conditions and a frost limiting the pace of the cane harvest.

"The possibility of crushing the entire 585m-tonne Centre South cane crop remains open to question."

'Economically advantageous'

Unica said that Centre South sugar production reached 2.53m tonnes in the second half of July, again the best period so far this season, but a decline of 14.8% on the same period last year, with a switch to making ethanol compounding the effect of the year on year fall in cane volumes.

Indeed, ethanol production rose 6.6% during the period, to 1.90m litres, accounting for 55.0% of the cane crush, a little more than the 54.7% in the first half of July.

Sales soared to 1.44bn litres, up more than 30% on both volumes in the first half of the month and in the second half of July last year, and driven by relatively cheapness compared with gasoline.

Mr Rodrigues said: "Ethanol prices were economically advantageous to consumers in major markets, it was only natural we should expect a breakthrough in hydrous ethanol consumption."

Thanks to relative pump prices, the trend of strong ethanol use "will be maintained in the next few weeks".

Raw sugar futures for October delivery closed up 1.0% at 16.98 cents a pound in New York.