Apr 07, 2010
April 1st Marks Start Of New Sugarcane Production Year In Brazil
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
March 31st marked the end of the 2009-10 sugarcane production year in Brazil and April 1st starts the 2010-11-production year. The sugarcane harvest in Brazil usually lasts from early April through December, but the sugarcane production year is considered to be the period of time between April 1st to March 31st.
During the 2009-10 production year (April 2009 through March 2010) Brazil processed 593.6 million tons of sugarcane, which was 4% more than the previous year. Of that total, 54.9% went toward the production of ethanol and 45.1% went toward the production of sugar. Ethanol production in 2009-10 totaled 25.4 billion liters, which was 8% less than the previous year. Total sugar production in 2009-10 totaled 32.7 million tons or 4% more than the previous year. The sugarcane harvest ended on a disappointing note late last year due to heavy rains that reduced tonnage as well as sucrose content in the sugarcane. Sugar production was up last year and ethanol production was down because processors adjusted their mills to produce more sugar and less ethanol to take advantage of the very high world sugar prices.
Expectations for the 2010-11-production year are for an increase in both sugarcane tonnage as well as the sugar yield per ton. In southeastern Brazil, where approximately 90% of Brazil's sugarcane is grown, the Union of Sugarcane Processors (Unica) is expecting a 15% increase in ethanol production and a 19% increase in sugar production. For the 2010-11-production year, they expect that 56.7% of the sugarcane will be used for ethanol production and 43.3% will be used for sugar production. The percentage used for ethanol production is 1.8% more than last year.
Potential Expansion Of Sugar/Ethanol Production In Brazil
Everyone involved in the sugar/ethanol industries in Brazil feels that Brazil will emerge as the foremost producer of renewable energy in the world. Their confidence is based upon:
- Brazil's sugarcane-based ethanol is considered more environmentally friendly than corn-based ethanol produced in the United States
- Brazil has the land area necessary for increased sugarcane production and in fact, most of the expansion of sugarcane is occurring into areas of degraded pastures
- Sugarcane production doesn't displace food production
- Brazil is very close to developing sustainable cellulosic ethanol production
- Foreign capital is pouring into Brazil's sugar/ethanol industries
- The country has the tropical climate necessary for sugarcane production
- Brazilians have 40 years of experience in producing ethanol
- EPA has certified that sugarcane-based ethanol reduces greenhouse gasses
- CME Group in Chicago and Bovespa in Sao Paulo are jointly developing ethanol futures contracts
- Brazil already has the best technology and know-how to produce sugar/ethanol
- Already exports 1.5 billion liters of ethanol to U.S. expects to export 15 billion by 2022
- Brazil has the capacity to displace 5-10% of world's gasoline consumption with ethanol within a decade
Hurdles To Future Sugar/Ethanol Expansion In Brazil
- A strong local currency that makes agricultural exports more expensive
- Tariffs around the world that are designed to keep out Brazilian ethanol
- Improvement and expansion of infrastructure needed to transport and export increased ethanol production
- Environmental concerns about the expansion of ethanol production taking away land needed for food production
- Availability of credit needed for expanded sugarcane production