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July 1, 2011

Brazilian Sugarcane Harvest Continues to Disappoint Producers

As the sugarcane harvest progresses in southeastern Brazil, the news just keeps getting worse for sugarcane producers. From the beginning of the harvest in March until the 16th of June, 134 million tons of sugarcane had been processed in southeastern Brazil, which represents a decline of 22.6% compared to the same time period in 2010.

According to the technical director of the Union of Sugarcane Industries (Unica), the primary problem was heavy rains at the start of the harvest season that delayed mechanical harvesting. The excess moisture also lowered the total recoverable sugars in the sugarcane which is a measure of the quality of the sugarcane. The total recoverable sugars thus far this harvest season has been 120 kilograms per ton, which is 2.97% lower than at the same time last year.

Since the harvest has started in southeastern Brazil, 5.34 billion liters of ethanol have been produced (3.4 billion liters of hydrous ethanol used in E100 and 1.94 billion liters of anhydrous ethanol used in E25). Sugar production thus far has totaled 6.73 million tons or 24% less than last year.

Ethanol sales thus far during the 2011/12 growing season have totaled 4.02 billion liters, 21% less than last year. Of the total produced, 3.81 billion liters have been used domestically (95% of the total) and 212 million liters have been exported (5% of the total).

Adding to producers concerns has been a frigid air mass that spread over southern Brazil this week. While the vast majority of the sugarcane fields avoided sub-freezing temperatures, the cold air should continue to slow the development of the sugarcane crop. The 2011/12 growing season marks the third year in a row of disappointing sugarcane crops in Brazil. During the 2009/10 harvest season it was too wet and during the 2010/11 harvest season it was too dry.

Industry officials are becoming concerned that if Brazilian producers cannot quickly increase sugarcane production there will be severe shortages of ethanol in the domestic market. Since the introduction of flex fuel cars in Brazil in 2003, the domestic demand for ethanol has increased faster than the industry has been able to ramp up production.