Brazil's sugar exports will top 27m tonnes this season for only the second time, despite a disappointing cane harvest in the key Centre South region, as mills prioritise the sweetener over ethanol.
The US Department of Agriculture's Sao Paulo bureau ditched expectations of a rise in Brazilian cane output in 2016-17, on an April-to-March basis, seeing the harvest fall 9.0m tonnes to 658.0m tonnes, citing the setback from poor weather to the harvest in the Centre South.
"The Centre South sugarcane production [estimate] has been revised downward to 608m tonnes, down 22m tonnes from the previous estimate due to drier weather than historical averages" early in the season.
"Lower investment on crop management," a reflection of the low sugar prices which prevailed until earlier this year, will also "negatively affect sugarcane volumes for the last third of the crop", the bureau said.
Indeed, it underlined ideas of a timely finish to the Centre South crushing season, which "is expected to end in December, therefore not repeating the abnormal length of the 2015-16 harvest which stretched through March 2016".
Sugar vs ethanol
The bureau's downgrade is the latest in a series to the Centre South cane crush, which reached 617m tonnes last season according to industry group Unica.
Last week, Job Economia cut its forecast for volumes in 2016-17 by 12m tonnes to 632m tonnes, while Unica said the crush would closer to the low end of its forecast range of 605m-630m tonnes.
However, the USDA bureau was upbeat on Brazilian sugar production nonetheless, flagging the incentive provided by elevated prices of the sweetener, sitting close to four-year highs in New York.
Mills will process 45% of their cane into sugar rather than ethanol, higher than a previous estimate of 43%, and last season's figure of 41%, the bureau said.
"This is a direct consequence of higher demand for sugar on the world market, due to an increased estimated deficit of world supply."
Export prospects
The bureau forecast Brazil's total sugar production in 2016-17 hitting a three-year high of 37.78m tonnes – 700,000 tonnes above the USDA's official estimate.
Exports will hit 27.12m tonnes, some 800,000 tonnes more than the USDA has officially factored in, and Brazil's second-biggest shipments on record.
The bureau flagged the boost to shipments from "the expected deficit of sugar on the world market and increased competitiveness of the Brazilian real".
Expectations of strong exports have gained credence with Brazilian export data for September released on Tuesday, which showed shipments at 3.189m tonnes – up 7.6% month on month and 81% year on year.
Fount: http://www.agrimoney.com/news/brazils-sugar-exports-to-grow-despite-cane-disappointment--10012.html
