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September 22, 2011

Brazil Sugarcane 11% Lower in Quality than in 2010/11

Dry weather during the month of August allowed for uninterrupted harvesting by sugarcane producers in southern Brazil, but while this may be good for harvest progress, the dry weather is not good for the quality of the sugarcane and it could cause additional problems for the 2012/13 harvest season as well.

Data released by the Union of Sugarcane Industries (Unica) indicates that 338 million tons of sugarcane has been harvested in southern Brazil since March when the 2011/12 harvest begun compared to 380 million tons during the same period last harvest season. Unica also reported that the quality of this year's sugarcane, as measured in Total Recoverable Sugars, is 11% lower than last year's crop. Sugar production thus far this harvest season has been 9.4% less than last year and ethanol production thus far has been 18.6% less than last year.

The lower quality of the sugarcane is being attributed to a number of factors including: an extended dry season in 2010, freezing temperatures in June and August, and an extended period of cold and dry conditions that prompted the sugarcane to flower. It is quite rare for sugarcane to flower and when it does, the plant expends energy in the flowering process instead of producing sucrose thus resulting in lower recoverable sugars.

In recent weeks, producers have been focusing their harvest activities on sugarcane fields that were impacted by the freezing temperatures in June and August. The cold temperatures slowed or stopped the maturation process of the sugarcane resulting insignificantly lower sugar production.

An additional problem is that the dry weather during August is impacting the development of the sugarcane that was planted in March and April. Since sugarcane is planted one year and harvested the next year, the reduced growth of the crop in 2011 could also result in reduced production in 2012.

Plans are already underway to increase ethanol imports from the United States to make up for the shortfall in Brazilian ethanol production. Domestic demand for ethanol in Brazil is increasing at an annual rate of 5% to 10% per year, but the production of ethanol over the last three years has not kept pace, resulting in increased imports from the United States.

Brazil has approximately 430 sugar/ethanol mills that use sugarcane as the source material and the United States has approximately 200 ethanol plants that use corn as the source material.