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May 31, 2011

Brazil Sugarcane Harvest off to a Disappointing Start

After two straight years of mediocre sugarcane harvests in Brazil, the 2011/12 sugarcane harvest is getting off to a less than auspicious start. According to the Union of Sugarcane Industries (Unica), thus far during the sugarcane harvest in Brazil, the total amount of sugarcane processed (56 million tons) is 40% less than the 94 million tons processed last year at this time. In addition to the low tonnage being processed in Brazil, the quality of the crop is also of inferior quality. The technical director of Unica now thinks the total sugarcane tonnage that Unica members were expected to harvest in 2011/12 (568.5 million tons) may be in doubt due to the extremely slow start.

The reduced tonnage is being blamed on the heavy rains during March that kept harvesters out of the fields. During the first 15 days of May, the amount of sugar produced by Unica members was 1.54 million tons compared to 1.87 million tons produced during the same period in 2010.

Thus far since the sugarcane harvest started throughout all of Brazil, 59.8% of the sugarcane processed has been directed toward ethanol production with 2.16 billion liters produced. The total sugar produced thus far has been 2.36 million tons.

The slow start is very disappointing for ethanol producers who had hoped for higher ethanol production to rebuild supplies after tight stocks resulted in record high ethanol prices in Brazil during the month of April. The high prices for ethanol caused many Brazilian motorists to switch from ethanol back to gasoline (E25) because gasoline was more economical to use. Ethanol producers are concerned that the production capacity of ethanol has not kept pace with the increased domestic demand resulting from ever larger numbers of flex fuel vehicles on Brazilian roads.