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October 20, 2017

Sugarcane Harvest Ending Early in Brazil due to Lack of Sugarcane

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

The weather in much of Brazil continues to be dryer than normal due to an extended dry season. The dry weather is not only delaying the planting of the 2017/18 soybean crop in Brazil, it has already impacted the production of sugarcane in south-central Brazil.

The state of Sao Paulo produces more than half of the sugarcane in south-central Brazil and the state is currently being impacted by the extended dry season. Most of the state has been very dry since July with some areas of the state not receiving any rainfall for over 120 days. The dry weather has resulted in reduced sugarcane production and as a result, an earlier-than-normal end to the sugarcane harvest season.

Generally, the sugarcane harvest ends in south-central Brazil sometime during November or December depending on the weather and the amount of sugarcane available for processing. Reuters is reporting that Raizen Energia's Santa Helena sugar/ethanol mill has already ended sugarcane processing for the season due to a lack of sugarcane. The dry weather has reduced sugarcane supplies to the point where the facility can no longer operate at its maximum efficiency. Some of the sugarcane remaining in the field will be diverted to other nearby Raizen facilities to maximize operations.

Raizen is the largest sugarcane processor in Brazil with more than 20 facilities and a combined capacity to process more than 60 million tons of sugarcane per year, or about 10% of the sugarcane produced in south-central Brazil. The Santa Helena facility has the capacity to process 1.5 million tons of sugarcane annually and it is the first of Raizen's facilities to cease processing. The facility was originally scheduled to end operations on November 4th.

The Union of Sugarcane Industries (Unica) is reporting that the sugarcane production in south-central Brazil is down 2% from a year earlier while other analysts put the reduction at 3%. Other large sugarcane processors in Brazil have also indicated that they will end operations earlier than normal during the month of November due to a lack of sugarcane supplies. Not only is the volume of sugarcane down this year, the dry weather has allowed for an accelerated harvest pace.

Ethanol shortages are not expected in Brazil because processors are producing as much ethanol as possible due to the better returns for ethanol compared to sugar.