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October 24, 2011

Sugarcane Harvest in Brazil Ending on Slightly Positive Note

After a very disappointing harvest season that will end a month earlier than normal, there is a little bit of good news for sugarcane producers in Brazil. Most of the sugarcane producing regions of Brazil experienced a period of dry weather during September which is resulting in a slight improvement in the Total Recoverable Sugars in the sugarcane. While this might improve this year's sugar production slightly, it is probably a negative for next year's production.

The amount of sugar produced is dependent on the tonnage of sugarcane and the amount of Total Recoverable Sugars contained in the sugarcane. According to the consulting firm Canaplan, the total recoverable sugars during the month of September ended up being 135.5 kilograms per ton, which is slightly better than the 134.5 kilograms per ton they had forecasted for the month of September. Apparently, dry weather helps to concentrate the sugar in the sugarcane resulting in slightly higher sugar yields.

While higher sugar content is good for this year's production, the dry weather probably impeded the development of the newly planted sugarcane, which could be a slight drag on next year's production.

Due to the improved quality of the sugarcane, Canaplan has increased their estimate of the amount of sugar produced in southern Brazil during 2011/12 from 28-28.5 million tons to 28.3 to 29.3 million tons, which is an increase of about half a million tons of sugar. The firm is expecting Brazil's total sugar production to be revised upward slight in the next report issued by Conab.

While this is a bit of good news for producers, their entire 2011/12 harvest season has been a disappointment. The total sugar production in Brazil is expected to decline at least 5% and the ethanol production could decline 15% to 18%. A turn-around in Brazil's sugarcane production is not expected any time soon due to the reduced investment in the industry over the last several years.