November 18, 2016

Greater than Normal Number of Sugar Mills Close Early in Brazil

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Sugar/ethanol mills in southern Brazil processed 31.7 million tons of sugarcane during the second half of October, which was a decline of 18% compared to the same period in 2015. As a result of the dwindling sugarcane supply, sugar/ethanol mills in Brazil are shutting down for the season at a faster pace than last year at this time. According to the Union of Sugarcane Industries (Unica), by the end of October, 55 sugar/ethanol mills in Brazil had stopped processing for the season compared to 18 the year before.

Twenty three mills in the state of Goias closed during the last two weeks of October due to a lack of sugarcane to process. Hot and dry weather in central Brazil from April through August reduced sugarcane production especially across central Brazil. The 55 mills that had closed by the end of October reported an 11.9% reduction in the amount of sugarcane crushed compared to 2015.

Brazilian sugar/ethanol mills have also been directing more of their production capacity toward the production of sugar which is currently more lucrative than ethanol. While sugar production was down during the second half of October, ethanol production was down more in comparison to sugar. During the second half of October, sugar production in Brazil declined 6% compared to the second half of October 2015 while ethanol production declined 29%. During the second half of October, sugar production was 2.05 million tons and ethanol production was 1.303 billion liters.

The volume of sugarcane processed during the second half of October was essentially the same as during the first half of the month, but the amount of total recoverable sugars declined 8.1% during the second half of the month.

Generally the Brazilian sugarcane harvest starts in March or April and ends in November or December. A few innovative mill owners in the center-west region of Brazil have retrofitted their facilities to utilize corn or sorghum to make ethanol during the months when sugarcane is not available.