Sugar production in the Center-South is expected to fall 13,6% in the second half of June

Sugar production in Brazil's Center-South region is expected to total 2,5 million tons in the second half of June, reflecting a 13,6% drop on the year, an S&P Global Commodity Insights survey of 10 analysts showed on March 8. July.

During the survey, the sugarcane crushing estimate varied from 41,0 million tons to 46,9 million tons for the second half of the month. The average estimate was for a total sugarcane crushing of 42,6 million tons, a drop of 6,3% in the year.

The climate in the Center-South was favorable for crushing during the period, with less than a day expected of rain and around 250-255 active mills.

“The weather was favorable, allowing mills to maximize crushing,” according to Platts Analytics. "The variables most expected by the market in the second half of June are the evolution of the ATR, which was below expectations in the previous fortnight, and the sugar mix after the most recent drop in the price of ethanol."

The proportion of cane used for sugar production is expected to be 45,3%, down from 47,6% in the previous year. Brazilian producers took advantage of the recent rise in ethanol prices during the early stages of the harvest, but now mills are expected to start directing more of their cane crushing towards sugar production.

Platts valued hydrous ethanol at the Ribeirão Preto plant converted into raw sugar equivalent to 16,23 cents/lb on July 7, according to data from S&P Global. The NY11 October sugar futures contract closed on July 7 at 18,52 cents/lb.

The sugar premium for ethanol production would approach 1,40 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 137,3 kg/mt, a reduction of 3,1% for the year.

Total ethanol production from sugar cane is expected to be 1,98 billion liters, a drop of 6,0%. Hydrous ethanol production was forecast at 1,24 billion liters, according to the average of analysts' responses to the survey. This would represent a drop of 0,3% for the year. Anhydrous ethanol production was 737 million liters, 14,2% lower in the year, according to the survey.

UNICA is expected to release its official production figures early next week.