Sugar production in the Center-South in the first half of September should be 15,1% higher

Sugar production in Brazil's Center-South is expected to total 2,94 million tons in the first half of September, reflecting a 15,1% increase on the year, an S&P Global Commodity Insights survey of 14 analysts showed on September 22 .

During the survey, the sugarcane crushing estimate for September 1st ranged from 35,9 million tons to 43,5 million tons. The average estimate was for a total sugarcane crushing of 41,0 million tons, an increase of 6,5% in the year.

“Sugar production is expected to be higher than last year in the two-week period due to higher crushing, ATR and sugar mix,” said Luciana Torrezan, head of sugar analysis at S&P Global Commodity Insights. “The gap between current cumulative production and previous cumulative production should be narrowing.”

The proportion of cane used for sugar production is expected to be 47,86%, up from 44,86% in the previous year. Brazilian producers took advantage of the high price of ethanol during the early stages of the harvest, but mills shifted more of their cane crushing to sugar production in the remaining period of the harvest to take advantage of the sugar premium over ethanol production.

Platts evaluated hydrated ethanol at a plant in Ribeirão Preto (SP) converted into raw sugar equivalent to 14,18 cents/lb on September 21. Platts is part of S&P Global.

The NY11 October sugar futures contract closed at 18,22 cents/lb on September 21, reflecting a premium of 4,04 cents/lb over the price of hydrous ethanol expressed in raw sugar equivalent to CBIOs.

The sugar premium for ethanol production would approach 3,44 cents/lb if decarbonization credits were added to the premium calculation. The CBIO, equivalent to 1 mt of CO2 not released into the atmosphere, is an instrument issued by biofuel producers and importers to ensure that Brazil achieves its decarbonization goals.

Recoverable sugar per ton of sugar cane, or ATR, is expected to be 157,31 kg/mt, an increase of 1,4% compared to the previous year.

Total ethanol production is expected to be 2,13 billion liters, an increase of 2,7% in the year. The expected production of hydrated ethanol was 1,26 billion liters, according to the average of analysts' responses to the survey. This would represent an increase of 6,0% for the year. Anhydrous ethanol production in the first half of September was 867 million liters, a drop of 1,8% in the year, according to the survey.