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September 24, 2012

Brazil's 2012/13 Sugarcane Crop Up Slightly From 2011/12

In their latest assessment of the sugarcane crop in southern Brazil, the Union of Sugarcane Industries (Unica) increased slightly their estimate of the 2012/13 Brazilian sugarcane crop. They now feel that 518 million tons of sugarcane will be processed in southern Brazil in 2012/13, which is 1.8% more than the 509 million tons they estimated in April of this year when the harvest started and 5.1% more than the 493 million tons processed last growing season.

The improved outlook in tonnage is due to the good rains received in the region in June which was approximately 200% of the historical average for southern Brazil. From the start of the harvest season until September 1st, the average tonnage per hectare has been 76 tons/ha, which is 5.4% higher than in 2011/12. The increased tonnage though has been accompanied by lower quality sugarcane. Thus far this harvest season, the Total Recoverable Sugars has been estimated at 129.49 kg/ton compared to 132.56 kg/ton last year. Wet weather tends to make the sugarcane grow more vegetatively and thus the plant produces fewer sugars as a result.

The increased tonnage has not been enough to compensate for the lower quality and thus the total potential recoverable sugars this year should end up being lower than what was estimated at the start of the harvest season (70.21 million tons vs. 71.26 million tons).

The harvest started slow due to wet weather in April, May, and June and the harvest pace remains slower than normal. In the state of Sao Paulo for example, the amount of sugarcane processed thus far during the harvest season is 29 million tons less than during the same period last year. There is a possibility that some of the sugarcane that was supposed to be harvest in Sao Paulo this harvest season may be held over and harvested in 2013/14.

Unica's estimate of Brazil's 2012/13 sugar production is now 32.7 million tons, which is 1.2% less that in April, but 4.5% more than the 31.3 million tons produced last harvest season. Total ethanol production is estimated at 21 billion liters, which is 2% less than in April, but 2.5% more than last year. Of the total 21 billion liters, 12.75 billion will be hydrous ethanol sold as E100 and 8.3 billion as anhydrous ethanol which is blended into gasoline.

The Brazilian government recently announced that in April of 2013 the amount of ethanol blended into gasoline will return to 25% from its current level of 20%. The government had lowered the blend percentage as a way to extend tight ethanol supplies. The lower blend percentage will stay in effect until the next sugarcane harvest begins in April of 2013.

While the sugarcane harvest in 2012/13 is a slight improvement over 2011/12, it is still a disappointing for an industry that had been hoping for a strong rebound after two poor production years.