March 20, 2014
Brazil's Sugarcane Crop down 10%, Copersucar Slowly Rebuilding
Reduced expectations for the 2014/15 sugarcane harvest in Brazil are resulting in strengthening sugar prices on the international market. Due to the reduced sugar production expected in Brazil, raw sugar prices have increased 20% since late 2013 to the present. Hot and dry conditions during December, January and early February have led to reduced estimates of the sugarcane production in Brazil. Last year producers in southern Brazil harvested 595 million tons of sugarcane and that was expected to climb to 640 million tons in 2014/15 before the hot and dry weather took its toll. Current estimates put the crop as low as 570 million tons or 10% below initial estimates.
Sugar production in Brazil is expected to fall from 34 million tons in 2013/14 to 32 million tons in 2014/15. Sugar prices have been low the last two years due to excess production worldwide, but the excess may disappear by later this year. Some sugar mills have already started to harvest the new sugarcane crop, but most mills will not start processing new sugarcane until April and finish harvesting sometime in December. The sugarcane season in Brazil goes from April 1st to March 31st.
The Copersucar cooperative is slowly recovering from the devastating fire last October that damaged or destroyed most of its Terminal Acucareiro da Copersucar (TAC) at the Port of Santos. Each month they have been able to increase the sugar exports from the damaged terminal and by the end of March they expect to have exported 700,000 tons from the terminal since the fire. In February they exported 200,000 tons and that is expected to increase to 250,000 in March.
Copersucar estimates that they will export 6.8 million tons of sugar before the end of the 2013/14 marketing year ending on March 31st. If achieved, it would be 11% more than the previous export season, but far short of the 8.5 million tons they had expected before their export facilities were damaged. Most of the exports had been shipped out before the fire and since the fire occurred, they have made alternative arrangements with other sugar terminals in Brazil to pick up the slack. Copersucar is composed of 47 associates and is the largest sugar and ethanol producer in the world.
Reconstruction is under way at the TAC terminal and company officials have indicated that they have completed the purchase of all the equipment needed for the reconstructed terminal. Starting in May of 2014, they expect to be able to export 4 million tons from the TAC terminal on an annual basis and they expect to achieve a capacity of 10 million tons per year starting in February of 2015. The TAC terminal had been expanded just months before the fire ripped through the facility.