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BRAZIL: Expectations for CS Brazil’s sugarcane performance as season enter final phase

Market Summary

October 24, 2016 - The next UNICA report on Center-South Brazil's cane crush in the first half of October will probably be one of the last two this season still capable of moving the market. From November on, sugar and ethanol volumes are expected to drop considerably, which is normal given we are approaching the end of crush and moving deeper into the rainy season.

That's why this report might inject a little movement into a market which has been quiet of late.

There are now widely varying estimates for this fortnight, especially of the number of days lost to rain. Looking at the chart we can see that, based on the amount of rain, some regions are estimated to have lost four days due to heavy rain and others only one.

But it is not only about the amount of rain but also about the wind, sunshine, the quality of soil and the volume a region can crush. Estimates of the days lost to rain up to now stand anywhere between two and 4.2 days therefore crush numbers vary significantly.

Analysis continues below...

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We reckon that during H1 October CS Brazilian mills lost about 2.4 days of crushing to rain and are forecasting a crush of around 36.9 million mt (up about 600,000 mt on the year).

Due to this wet weather -- which only happened at the end of the period – we expect a drop in the ATR of only about 2kg/mt from the previous fortnight to 144.1 kg/mt. Here the ATR levels might again surprise on the upside.

We also see a drop in the sugar mix of two percentage points from the high so far this season in H2 September to 48.2% because when it rains it is easier to produce more ethanol.

All in all, this should put another 2.44 million mt of sugar on the market (up 344,000 mt on the year) and about 1.6 million cu m of ethanol, bringing cumulative output so far this season to 30.22 million mt of sugar (up 4.9 million mt on the year) and 21.47 million cu m of ethanol (down 1%).

Attention is also turning to the 2017-18 season beginning next April. Industry analyst Datagro estimates CS Brazil will produce between 36.1 million mt and 36.4 million mt of sugar in the 2017-18 (April-March) season. If achieved, it would be an increase of 1.8 million mt to 2.1 million mt, the highest since 37.8 million mt was produced in 2013-14.

In July, the consultancy said Central-South Brazil's sugar production could increase between 1.5 million mt and 2 million mt.

The world's largest sugar producer is expected to crush between 580 million mt and 610 million mt of sugarcane in 2017-18. The country is expected to produce 35 million mt in 2016-17.

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