CS Brazil's H2 October sugarcane crush expected at 29.68 mil mt: survey


The amount of sugarcane crushed in Brazil's key Center-South region in the is expected to total 29.68 million mt in the second half of October, down 6.7% from the same period a year ago, according to an S&P Global Platts survey of analysts Wednesday.

The 2017-18 sugarcane season started April 1 in the Center-South, the world's largest sugarcane- and sugar-producing region. Industry association UNICA is expected to release its official production figures for the region on in the upcoming days.

If analysts' expectations are met, the volume of sugarcane crushed would be down 8.4% from the the prior two weeks, when 32.41 million mt was crushed.

"This drop in sugarcane crushing is due to the fact that mills are winding down their activity as we are approaching the season's end, while rains have disturbed crushing and 3.3 days are estimated as lost to rain," said Claudiu Covrig, senior sugar analyst at Kingsman, the agricultural analysis unit of Platts.

"Nevertheless the rains are more than necessary this period of the year, as they impact the cane development for the next year. With cane being estimated as being 3.7-4 years old (far from the ideal level of 2.9-3 years old) rains can't be seen just as a blessing, but as a necessity, and if they won't happen at levels above historical averages from now ... up to March 2018 we might have a big surprise in terms of agricultural productivity and cane volumes harvested next year in CS Brazil," he said.

"Due to an older cane, I already expect a lower cane crush for the next season in CS Brazil, which shall be closer to 575 million mt (... from 592 million mt expected for this season)," Covrig added.

Sources were considering the usual lower productivity after seven months from the start of CS crushing season and the rainy days that have capped the sugarcane harvest.

Analysts estimated that three-and-a-half days were lost to rain in the two-week period, hampering the pace of the crush and lowering the ATR, or total recoverable sugar level.

"Even when rain ceases, we need to wait a bit further to return [to] the harvest pace, as the land [needs to be] dry to turn on the harvesting machines," said a sugar mill representative.

Center-South mills initially were expected to stop crushing activities by the end of November, but after almost seven days of not crushing in October, many mills will continue their activities in December.

The consensus for the cane's ATR in H2 October was 143.16 kg/mt, 3.7% above the 138.03 kg/mt ATR recorded the previous year, with a wider range of 140-149.5 kg/mt. This comes after reaching a 159.33 kg/mt peak in H2 September.

As the biofuel is still paying better than the sweetener in H2 October, mills were forecast to dedicate 42.36% of the total cane crush to produce sugar, down from 49.29% registered in the same period of the 2016-17 crop.

According to Platts data, hydrous ethanol converted into raw sugar-equivalent was assessed at 15.29 cents/lb November 7 while the NY11 sugar futures market closed at 14.22 cents/lb the same day, meaning hydrous ethanol was paying $23.59/mt more than raw sugar in the global market.

Analysts that Platts surveyed forecast average sugar production at 1.721 million mt, down 16.5% from the previous year because the international price of sugar shrank since the 2017-18 crop started in CS Brazil.

In October, NY 11 sugar futures traded at an average 14.23 cents/lb, down 37.91% from the 22.92 cents/lb average in October 2016.

Ethanol production turned more profitable than sugar in early August for the first time since first-quarter 2016, according to Platts data. Hydrous ethanol's average premium over raw sugar stood at 88 points through October, according to Platts calculations, compared with 63 points in September.

Hydrous ethanol output in H2 October was expected to have been 806 million liters,up nearly 19% from a year ago, while anhydrous production is forecast to be 622 million liters, up 0.1% from a year ago, according to the survey.


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