August 13, 2012

Sugarcane Production in Mato Grosso Least of Center-West States

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

While sugarcane production is expected to increase in Mato Grosso in 2012/13, it continues to trail the states of Goias and Mato Grosso do Sul in the center-west region of Brazil. The total 2012/13 sugarcane harvest in the state is estimated at 16.0 million tons, which is 22.3% more than the 13.1 million tons produced in 2011/12. Mato Grosso producers increased their sugarcane acreage by 6.9% from 220,000 hectares to 235,400 hectares. Yields per hectare are oalso expected to increase due to the sugarcane being planted at a more ideal time.

Sugarcane producers in Mato Grosso are devoting more of their sugarcane for the production of anhydrous ethanol used to blend with gasoline than for hydrous ethanol which is sold as E100. The reason for the increase in anhydrous production is in anticipation of Brazil returning to a blend of 25% ethanol in their gasoline (E25). The blend percentage was reduced earlier in the year as a way to extend limited supplies of ethanol. In 2012/13 approximately 54.6% of the sugarcane used for ethanol will be to produce anhydrous ethanol compared to less than 50% last harvest season.

According to Conab, 77% of the sugarcane produced in Mato Grosso will be used for ethanol production and only 23% for sugar production. An estimated 12.3 million tons will be used for ethanol and 3.7 million tons for sugar production.

In the center-west region of Brazil, Mato Grosso produces less sugarcane that either Goias or Mato Grosso do Sul. The state of Goias is expected to harvest 52.4 million tons of sugarcane in 2012/13; with Mato Grosso do Sul producing 38.5 million tons and Mato Grosso 16 million tons. The production of sugarcane in Goias and Mato Grosso do Sul increased approximately 300% over the last ten years, whereas in Mato Grosso it increased only 8% during the same period.

According to the Agricultural and Livestock Federation of Mato Grosso (Famato), the reason for the slower growth in Mato Grosso is due to new environmental regulations that restrict where sugarcane can be produced in the state. The new environmental regulations prohibit the planting of sugarcane in more than half of the state that is considered to be environmentally sensitive. The states of Goias and Mato Grosso do Sul do not have similar restrictions to the expansion of sugarcane production.