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December 30, 2014

2014/15 Sugarcane Harvest ending on Disappointing Note in Brazil

In their third evaluation of the 2014/15 Brazilian sugarcane crop, Conab is estimating that the ethanol production in Brazil will increase while the sugar production will decline.

Now that the sugarcane harvest in southern Brazil is practically concluded, Conab is estimating that the total ethanol production in 2014/15 will be 28.66 billion liters or 2.5% more than in 2013/14. Of this total, 41% of the ethanol will be anhydrous ethanol that is blended with gasoline and 59% will be hydrous ethanol that is sold as pure ethanol or E100. The production of anhydrous ethanol this harvest season is down 0.2% while the production of hydrous ethanol is up 4.5%.

Brazil's total sugar production was estimated at 36.36 million tons or 4% less than last year. Southern Brazil is responsible for 90% of Brazil sugarcane production and sugar production in southern Brazil is expected to decline 5% to 32.6 million tons.

The state of Sao Paulo remains by far the largest sugarcane producer with 52% of the sugarcane acreage followed by Goias at 9.5%, Minas Gerais at 8.8%, Mato Grosso do Sul at 7.4%, Parana at 7.1%, Alagoas with 4.3%, and Pemembuco with 2.9%.

The sugarcane producers in southern Brazil have had several difficult years in a row. The combination of dry weather and freezing temperatures in southern Brazil has led to declining sugarcane production. The decreased production would have been even greater were it not for increased acreage.

Sugarcane producers and processors petitioned the federal government to increase the percentage of ethanol blended into the gasoline from 25% to 27.5% which will start in next month. This is expected to increase the ethanol volume, but a drop in international oil prices is expected to hold down ethanol prices.