October 31, 2011

Sugarcane Harvest in Mato Grosso Ending a Month Early

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

Of the ten sugar/ethanol mills in the state of Mato Grosso, seven have already ended the sugarcane harvest for the 2011/12 season including the largest mill in Mato Grosso, Usina Itamarati located in the city of Nova Olimpia. The three mills that remain open are in Barra do Bugres, Jaciara, and Alto Taquari. According to the Syndicate of Sugar/Alcohol Industries in Mato Grosso (Sindalcool), even these three remaining mills will end harvest operations by mid-November. In more normal times, the sugarcane harvest in the state would generally not end until mid-December.

The sugarcane production in the state ended up being 5% less than what had been expected at the start of the harvest. The lower production is being attributed to two extended dry seasons in a row that slowed the development of newly planted sugarcane. In addition, the extended dry season last year delayed the start of this year's harvest until April of 2011, which is a month later than normal, so the harvest started a month late and it is ending a month early.

The sugarcane producers are a bit more optimistic for the next harvest season. Since the rainy season has started very good in Mato Grosso this growing season, producers are expecting that the newly planted sugarcane will have an accelerated development and they feel the harvest could begin next March, which would be a month earlier than this year.

With a disappointing harvest behind them, the concern now is if there will be enough ethanol available to meet domestic demand until the harvest resumes next March. In anticipation of a disappointing harvest, domestic ethanol prices have risen to very high levels in Brazil and as a result, ethanol consumption has declined. Motorists have switched from using E100 back to gasoline (E25) due to price and that in turn has helped to extend ethanol supplies.

In 2010, hydrous ethanol consumption in Mato Grosso (E100) totaled 416 million liters and that is expected to decline to 320 to 350 million liters in 2011. Total hydrous ethanol production in 2011 is expected to be 540 million liters, so there should be enough hydrous ethanol available in the domestic market to carry it through until the next harvest begins.