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June 18, 2012

Brazilian Sugarcane Harvest off to Worrisome Start

Sugarcane producers in southern Brazil are worried about the problematic start to the 2012/13 sugarcane harvest. After a nearly disastrous year in 2011/12, they had been hoping that 2012/13 would be a rebound year for the industry, but that has not been the case thus far.

After a slower than normal start to the harvest season, the situation got even worse in May. During the last 15 days of May, there was 35.6 million tons of sugarcane harvested in southern Brazil, which was a decline of 17% compared to May of 2011. From the beginning of the harvest through the end of May, there have been 70.71 million tons harvested, which is nearly 30% less than the 100.45 million tons that had been harvested through the end of May 2011.

The slowdown thus far has been the result of wet weather that has kept the harvesters out of the fields. During the month of May, the sugar/ethanol mills in southern Brazil averaged 8.7 days without being able to harvest compared to just 3.5 days in May of 2011.

The productivity per hectare is also coming in below that of last year. According to the Sugarcane Technology center (CTC), the average yield in southern Brazil during the month of May was 73.7 tons per hectare which was 3.7% less than May 2011. The average tonnage thus far this harvest season is down 4.8% compared to 2011. There are 278 sugar/ethanol mills currently processing sugarcane in southern Brazil which is 12 less than in May of 2011.

The poor start to harvest season thus far does not bode well for the remainder of the harvest season. Continued wet weather could reduce the quality of the sugarcane as well going forward. If there is excessive moisture during the harvest season, the sugarcane accumulates less sucrose on the stalk and thus less Total Recoverable Sugars are available to produce sugar and ethanol.

From the beginning of the harvest through the end of May, Brazil produced 3.53 million tons of sugar, which is 26% less than during the same period in 2011. Total ethanol production during the same period has been 2.61 billion liters or 33% less than last year. Since the start of the 2012/13 harvest, 54.4% of the sugarcane has been used for ethanol production compared to 57.0% last year.

Of the ethanol produced and sold thus far, 90.8% has been for the domestic market and 9.2% has been for export.