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August 27, 2012

Brazil Sugarcane Harvest Running 13% behind Last Year

The sugarcane harvest in Brazil is approaching the half way mark and the total tonnage that has been processed in southern Brazil continues to lag last year's pace. According to the Union of Sugarcane Industries (Unica), between the start of the harvest season until August 15th, the sugar/ethanol mills in southern Brazil have processed 261 million tons of sugarcane, which is 37 million tons less than what was processed during the same period in 2011 or a reduction of 13%.

In addition to reduced tonnage, the quality of the sugarcane this year is inferior to what it has been for the last two years. Thus far during the harvest season, the Total Recoverable Sugars have been averaging 126.5 kilograms per ton compared to 130.2 kilograms per ton during the 2011/12 harvest. The quality of the sugarcane has improved somewhat during the first half of August to 139.4 kilograms per ton due to dryer weather, but it is still lower than the 143.4 and 152.9 kilograms per ton recorded during the first half of August in 2011/12 and 2010/11 respectively.

The problem this year has been rainy weather. The rainy season was extended this year and it continued to be very wet in southern Brazil until the end of June. Normally, the rainy season ends sometime during the month of May. The wet weather not only delayed the start of the harvest, it also resulted in a lowered amount of the total recoverable sugars in the sugarcane. The weather during August has been dry and that is why the quality of the sugarcane has improved.

Of the sugarcane that has been harvested, 48.6% has been processed into sugar compared to 47.1% last year. Thus far during the 2012/13 harvest season, 15.3 million tons of sugar and 9.96 billion liters of ethanol have been produced in Brazil, both of which are about 10% less than what had been produced during the same period last year.

Processors are now anticipating that the harvest may not end until the middle of December. Extending the harvest season that far into the new rainy season is a risky proposition. When the rains start again in September, in addition to making the harvest more difficult, the wet weather will also lower the quality of the sugarcane once again. Even with the possibility of an extended harvest season, it is going to be very difficult to make up for the deficit in tonnage and quality that has already occurred.

Unica estimates that 509 million tons of sugarcane will be processed in southern Brazil during the 2012/13 harvest season, but there is a growing possibility that some of the sugarcane will be left in the field to be harvest next year, making 2012/13 another disappointing year for sugarcane producers in southern Brazil.