Brazil looks forward to huge sugarcane harvest
Rain in the first quarter of the year is essential for a healthy sugarcane field. Analysts believe that the Brazilian agricultural yield, that is, sugarcane harvest, could increase by seven percent this season, reaching almost 79 tons of sugarcane per hectare (TCH).
This would be the highest TCH since 2020/2021, when Brazil crushed 605 million tons of sugarcane. For the coming season, sugarcane crushing should reach around 600 million tons. This figure has an upward bias but will largely depend on rainfall during the rest of the year.
The last four sugarcane harvests were characterized by drier than normal weather conditions. The harvest is interrupted if more than 10 mm is recorded in a day and so in the last 4 years, the dry weather in some cases (2020/21) allowed a higher crushing due to a higher time efficiency, while in others (2021/22) led to a lower harvest which leads to lower cane crushing.
More sugar, more sugar…
Analysts believe that CS Brazil will produce 37.6 million tons of sugar in the 2023/2024 season. This would be the second highest production ever.
Again, there is an upside risk to this figure, depending on weather conditions. If it rains more than expected, the sucrose content will be affected. More humid weather results in lower sugar concentration, which affects overall production.
Analysts believe that mills will maximize sugar production over ethanol for the fourth consecutive season. This is because sugar pays more than ethanol. Given the volume of sugarcane and ATR (sucrose content), the sucrose allocation to sugar is expected to reach 47.5% this season – the highest since 2011.
Still hard to reach the world
Although analysts have increased their estimates of sugar production from their January forecast, it does not mean that the world will see this sugar available before Q4. Brazilian logistics will be a problem this season, due to record grain harvests. Over 80% of sugar is exported through the port of Santos, while the share of corn is 40% and soybeans 25%.
As the sugar terminals also operate grain, the capacity allocated to sugar is already occupied. Analysts estimate that monthly sugar exports will be limited to 2.6 mmt which will have a major impact on sugar prices on the commodity market.
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