Bloomberg News

Brazil Area Sugar-Cane Output Seen by JOB Up 13% in 2013-14

October 17, 2012

Sugar-cane output in Brazil’s center south, the main growing region of the world’s biggest producer, is set to jump 13 percent in the season that starts in April there, according to JOB Economia & Planejamento Ltda.

Cane processing in the area will rise to 574 million metric tons in 2013-14, Julio Borges, the director at the Sao Paulo- based research company, said at a conference in London today. That compares with an estimate of 510 million tons in the current season, he said, adding that 5.7 million tons of cane will be left un-harvested in the fields this year.

“Considering the area we have and normal weather conditions, we return to normal production potential,” Borges said in an interview on the sidelines of the conference, organized by Sugar Online. “We are working with the assumption of wet weather, which will benefit the next crop.”

Sugar production in the center south is likely to remain little changed at about 32 million tons in 2013-14, he said. That compares with a forecast for 31.6 million tons in 2012-13. Ethanol output in the area is likely to jump by 30 percent next season as the incentive to produce the biofuel at the expense of the sweetener increases, he said. Brazilian millers can make both commodities from raw material sugar cane.

“Certainly the mix in the new crop will be more focused on ethanol than this season,” he said, referring to the percentage of the sugar cane crushed that is used to make one commodity or the other. “Sugar is starting to lose its attractiveness and ethanol is becoming relatively attractive.”

Gasoline Prices

Consumption of anhydrous ethanol, the kind blended into fuels, may rise in Brazil next year as the government is likely to increase the mandatory blend into gasoline back to 25 percent from 20 percent now, Borges said. Gasoline prices are also likely to be raised, which in turn will boost the usage of hydrous ethanol, the kind used in flex-fuel cars, he said.

“The environment for more ethanol is favorable,” he said. “I don’t see the stimulus to produce sugar in a surplus market.”

Raw sugar prices traded in New York have fallen 14 percent this year to 20.13 cents a pound. The commodity needs to be at 21 cents a pound to make exports from Brazil’s center south viable in the long term, Borges said.

To contact the reporter on this story: Isis Almeida in London at ialmeida3@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net


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