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July 25, 2011

Sugarcane Production Declining in Brazil, Harvest May End Early

As the sugarcane harvest in Brazil approaches the half way mark, estimates of the total tonnage continue to decline. The Union of Sugarcane Industries (Unica) recently lowered its estimate for the 2011/12 sugarcane tonnage in southeastern Brazil to 533 million tons (6% below 2010/11) and now two private consulting firms have lowered the estimate even further.

The consulting firm Kingsman SA now estimates the total tonnage in southeastern Brazil at 525 million tons, and the consulting firm Canaplan estimates the crop at 520 million tons.

The causes of the declining production are many fold with some dating back several years. The long term nature of sugarcane production has also contributed to the current problems. Once a field of sugarcane is planted it is harvested several times over a 5-6 year period. After five or six years, the production starts to decline and the sugarcane needs to be replanted. Part of the current problems stems from the fact that many sugarcane producers have tried to stretch out the time between renovations in order to save money and the result has been declining production.

The current production problems started in October and November of 2009 when heavy rains hindered the last two months of the harvest. Producers were desperate to finish the harvest and they sent the heavy harvesting machinery into the fields when the soils were too wet. The result was severe compaction which slowed the re-growth of the sugarcane. The situation was compounded in 2010 when an extremely long and hot dry season (some locations went over 160 days without rain) lowered the production yet again.

For the current harvest, the problem has been severe frost/freezes at the end of June which lowered the production even more and now some of the sugarcane is starting to flower. Flowering by a sugarcane plant is an unusual event and it is generally triggered by a specific set of climatic factors. Once sugarcane plants start to flower, the productivity of the plant is lowered because too much energy is devoted to flowering instead of producing sucrose.

The reduced amount of available sugarcane may actually result in an early end to the harvest season. Generally the sugarcane harvest in southeastern Brazil ends in early December, but it is possible that it could end in late October or early November this year.

Kingsman SA estimates that 46.5% of the sugarcane will be utilized for sugar production and that 53.6% will be used for ethanol production. They estimate that the total 2011/12 sugar production in southeastern Brazil will be 31.6 million tons which is less than Unica's recent estimate of 32.4 million tons.