Jul 27, 2010
Dry Weather Reduces Estimates of Brazil's Sugarcane Production
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
Dry weather in southeastern Brazil has lead to lower estimates for the amount of sugarcane that will be processed during the 2010/11 growing season. The early end to the rainy season last April resulted in some areas in southeastern Brazil going without rain for up to 130 days. The dry weather is also expected to result in lower sucrose content of the sugarcane that is harvested during the last half of the growing season that will end in December.
As a result, the consulting firm Datagro has lowered its estimate of the total amount of sugarcane that will be harvested in southeastern Brazil from its previous estimate of 604 million tons to 585 million tons. If confirmed, it would still be 8% more than last year's crop of 541 million tons, but it would be lower than initial estimates.
Total sugar and alcohol production are also expected to come in below initial estimates. Datagro estimates that sugar production in southeastern Brazil will fall 500,000 tons below last year's 32.9 million ton production. The percentage of the sugarcane used to produce ethanol is expected to increase slightly from 58.3% last year to 58.5% this growing season.
One of the big changes in Datagro's forecast was for the amount of ethanol exports from Brazil. They are estimating that Brazil will export 1.72 billion liters of ethanol during the 2010/11 growing season, which would be significantly lower than the 3.75 billion liters exported during the 2009/10 growing season. The reduced exports are due mainly to less ethanol being imported by the United States. The reduced exports mean that more ethanol will be available for the ever increasing domestic market.
The domestic demand for sugar and ethanol are expected to continue rising in Brazil and with reduced production of both products, supplies are expected to remain tight through the end of the harvest season. As a result, domestic prices for ethanol and sugar are expected to remain firm at least through the end of the year.