World Economy

Brazil Sugar Exports to Fall Despite Cane Recovery

Brazil Sugar Exports to Fall Despite Cane RecoveryBrazil Sugar Exports to Fall Despite Cane Recovery

Brazil’s sugar exports will fall, a little, in 2015-16 for a third successive season despite a recovery in cane production, as mills divert more crop to making ethanol, US farm officials said.

The US Department of Agriculture’s Brasilia bureau, in its first estimate for Brazil’s cane crop for the season which started last month, pegged it at 648m tons, a rise of 19.4m tons year on year, AgriMoney reported.

The increase reflects a an expectation of a 590m-ton harvest in the key Center South region, up from 570.6m tons last year, despite dryness in January which raised some market concerns.

“Rainfall during the October-March period was above the historical average, except for a 20-day dry spell in January, thus contributing to a larger overall sugar cane crop,” the bureau said in a report.

  Ethanol Vs Sugar

However, Brazilian production of sugar itself will rise by only 150,000 tons, or 0.4%, to 36.35m tons, the briefing said, citing a switch to pushing an increased proportion of cane towards making ethanol.

Sugar production will account for 43% of cane in 2015-16, down 0.5 points year on year, with the balance used to make ethanol, whose appeal is being boosted by an increase to 27% in the mandated level of the biofuel which must be blended into gasoline.

As for hydrous ethanol – used by cars which rely on pure ethanol for fuel, rather than that blended with gasoline – it is “expected to remain price competitive with gasoline during the season”, underpinning its appeal.

  Exports Drop

With domestic sugar consumption increasing, the bureau forecast Brazilian sugar exports in 2015-16 down 200,000 tons at 24.35m tons.

That would represent a six-year low for shipments from what is by far the biggest exporting country, and a third successive annual decline from the record 27.65m tons set in 2012-13.

The report comes in the early stages of the 2015-16 cane crushing season, which has attracted a wide variation of estimates amid uncertainty over damage from the dearth of rain in January, and potential longer-term effects from a more severe and long-lasting drought last year.

A revival in the real since late March has also spurred ideas of Brazilian exports losing some competitiveness.