Aging cane fields, weather continue to affect Brazil crush

By Kris Bevill | November 04, 2011

Brazil’s aging sugarcane fields, combined with prolonged adverse weather conditions, are being blamed for yet another reduction in the country’s crush forecast. UNICA, the Brazilian Sugarcane Industry Association, said Nov. 1 that it now expects the 2011-’12 crush for the south-central region of Brazil to be 488.5 million tons—nearly 13 percent less than the previous year’s harvest—with yields 20 percent lower than the historical average of 85 tons per hectare. Other factors contributing to the reduced harvest expectations include an increase in mechanized planting and harvesting in non-systemized areas, increased issues with new diseases and pests, and increased production in regions with lower productivity potential, the group stated.

UNICA’s outlook for the next year’s harvest cycle is only slightly improved. “The variables mentioned, along with the expectation of only four new crushing mills launching next year should result in a very slight increase in crop production for the 2012-’13 harvest,” UNICA technical director Antonia de Padua Rodrigues stated. He suggested that investors seeking to improve the situation for the coming several years should focus on the renewal of sugarcane fields.

Despite the poor yields, the quality of the cane appears to be good, according to UNICA. This should limit the reduction in the total amount of sugar and ethanol produced to less than 3 percent of the previous forecast. Mills are expected to produce slightly more ethanol than sugar with the crop this season. However, a total of 20.93 billion liters (approximately 5.5 billion gallons) of ethanol is expected to be produced this season, nearly 20 percent less than the previous harvest.

Brazil continues to expect ethanol imports to make up its shortfall in supply through the end of the year. UNICA said 567.77million liters (about 150 million gallons) of ethanol have been imported between April and September.  By December the total could reach 1.2 billion liters (about 317 million gallons). Demand for anhydrous ethanol in Brazil is expected to increase by 10 percent this year, despite the government’s decision earlier this fall to reduce the blending mandate from 25 percent to 20 percent. Demand for hydrous ethanol, however, has fallen by more than 30 percent compared to the previous year.

Meanwhile, Brazil expects to continue to be a net exporter of ethanol, albeit at a slower pace. Exports are primarily being filled to meet previous commitments and could total 1.65 billion liters (approximately 436 million gallons) this year, down more than 6 percent compared to last year.