CS Brazil cane crush rises on dry weather, total crush estimates lowered


A combined 45.31 million mt of sugarcane was crushed in Center-South Brazil in the second half of June, up 7.8% from the first half total, but down 5% from the year-ago period, when 47.71 million mt was crushed, data from industry association UNICA showed Wednesday.

The volume crushed was about 50,000 mt below consensus market expectations in an S&P Global Platts survey of analysts released July 6.

The cane crush continued to improve as weather hit the driest levels for the year, with total rainfall in the region recorded at just 1.5 mm, 93.8% below historical averages, with rainfall in Sao Paulo state coming in at 0.14 mm, 99.1% below historical averages, said Claudiu Covrig, a senior analyst at S&P Global Platts Analytics.

The cumulative cane crush has reached 222.57 million mt, up 11.6% from 199.43 million mt crushed during crop year 2017-18, according to UNICA.

The 2018-19 sugarcane season began on April 1 in the key Center-South region, the largest sugarcane and sugar producer in the world.

But excessive dryness is expected to bring sudden death to the crop, meaning it should end the crush season a month to a month and a half earlier than usual. Most analysts have revised their cane crush estimates lower recently in response to the adverse weather.

"We have revised down our cane crush estimates to 570 million mt, about 14 million mt lower than previous expectations," Covrig said.

There were 255 mills in operation as of June 15, compared with 266 mills a year earlier, according to UNICA.

Total Recoverable Sugar (ATR) levels averaged 140.06 kg/mt of cane in H2 June, a 3.4% increase over H1 June, when ATR was 135.45 kg/mt of cane, and up 7.78% from 129.94 kg/mt recorded in the same period last year. The figure exceeded market expectations of 138.7 kg/mt, and is also the highest ATR recorded during the period since the 2010-11 crop, according to the Platts survey.

Dry weather throughout the Center-South region has continued to bolster ATR levels, raising the cumulative average for the crop year to 129.10 kg/mt. That ATR level represents an increase of 4.84% over the same period in CY 2017-18, according to UNICA.

Sugar production in the region in H2 June totaled 2.28 million mt, up 15.2% from 1.98 million mt produced during H1 June, but down 23.69% from the year-ago period, UNICA said.

The sugar production estimates came in lower than analyst estimates of 2.327 million mt, according to the Platts survey.

Cumulative sugar production between April 1 and June 30 was 9.747 million mt, down 12.1% from CY 2017-18, when 11.9 million mt were produced in the year-ago period. The production missed Platts survey estimates by 50,000 mt.

Brazilian mills have shifted production toward hydrous ethanol due to its greater profitability and strong sales.

Hydrous ethanol output in H2 June reached 1.55 billion liters, rising 7.6% from 1.44 billion liters produced during H1 June, and 60.2% higher than the same period in 2017-18. The increase soared past analyst expectations of 1.447 billion liters.

Cumulative hydrous ethanol output has risen 76.4% year on year, hitting 7.77 billion liters so far in CY 2018-19, compared with 4.41 billion liters in the same 2017-18 period. The current cumulative hydrous ethanol production remains 200 million liters above analyst expectations.

Anhydrous ethanol production in H2 June reached 798 million liters, a nearly 14% increase from 700.58 million liters produced in H1 June. Cumulative anhydrous production was up to 3.29 billion liters.

Mill production of ethanol fell 1.20 percentage points to 62.33% in H2 June, while sugar production rose by the same amount to 37.67% over the same period.

The cumulative share of sugar versus ethanol production by mills was 35.60% sugar and 64.40% ethanol, with the share of ethanol production increasing 11.79% from the previous harvest, when 47.39% of cane went to sugar production and 52.61% to ethanol production.

"If the mills had not changed the mix of production, we would have registered sugar manufacturing of 2.6 million mt, higher than current levels," said Antonio de Padua Rodrigues, technical director at UNICA.


Total domestic ethanol sales in June totaled 2.62 billion liters. Of that total, 2.52 billion liters were sold into the domestic market, while 100.03 million liters were exported, according to UNICA.

Hydrous ethanol sales reached 1.69 billion liters in June, a 47.8% increase compared to approximately 1.14 billion liters sold during the same period in CY 2017-18. Anhydrous ethanol sales reached 837.61 million liters, slightly lower than the 839.94 million liters produced in CY 2017-18, UNICA said.

Cumulative ethanol sales reached 6.53 billion liters, with 260.02 million liters being exported and 6.27 billion liters bound for the domestic market, representing growth of 11.81% versus CY 2017-18.

"Despite the increase in the production of hydrous [ethanol] surpassing 75%, there are no widespread problems regarding physical storage," Padua said. "Current ethanol storage is at 35% of capacity," he continued.

Hydrous ethanol is mostly used as fuel in flex-fuel vehicles and competes with gasoline at the pump. Anhydrous is blended with gasoline at a 27% ratio under a national mandate. Both products are also used in industry.


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