The proportion of sugarcane that was directed to making sugar in Brazil's key Center-South region in the first half of April is expected to come in at 28.5%, an S&P Global Platts survey of analysts found Tuesday.
This would be down 10.3 percentage points on the year and the lowest percentage used for sugar in the H1 April period since the 2008-09 crop, when it was 26.69%.
It would be up 7.5 percentage points from the level seen in H2 March, the end of the old crop.
The 2018-19 sugarcane season officially started April 1 in the Center-South, the world's largest sugarcane and sugar-producing region.
Industry association UNICA is expected to release its official production figures for the region this week.
The low sugar mix is a response to higher ethanol prices, which although recently under pressure due to the start of the crop, are still more profitable than sugar by an average of 230 points or $50.69/mt, according to Platts data from April 1-23.
"As ethanol keeps on paying better than sugar, mills should have maximized ethanol production even if the dry weather looked supportive for the ATR [total recoverable sugar] level," said Claudiu Covrig, senior sugar analyst for S&P Global Platts Analytics.
As for the total amount of sugarcane to be crushed in the first two weeks of the 2018-19, analysts expect it to total 19.1 million mt, up 7.7% on the year helped by average rainfall below the historical levels for the region.
The volume is also up 11.34 million mt from H2 March.
In terms of the sucrose content, due to drier weather than usual a recovery is expected. The consensus for the cane's ATR in H1 April was 111.5 kg/mt, with individual forecasts ranging from 104-118.2 kg/mt. That would be up 4.4 kg/mt on the year and about 2 kg/mt from H2 March.
According to the average of analysts' expectations, the volume of sugar output should decrease to 578,000 mt, down 18% on the year and the lowest since for H1 April since 2015-16 when 396,000 mt was produced.
Overall ethanol production is expected to be 33.6% higher compared to a year ago at 902 million liters, according to the average of analysts' estimates. The volume would also be up 480 million liters from H2 March.
Based on the average poll results for ethanol production, the share of hydrous in ethanol production is expected to reach 79.1% for an output of 712 million liters. This is up 38.8% from a year ago, when 513 million liters of hydrous ethanol was produced, representing 76% of total ethanol production.
In H2 March hydrous volume was 422 million liters and accounted for 98% of total ethanol production.
The stronger output is a response to rising hydrous prices, which reached a record high in the March 13-16 period amid tight stocks and strong consumption rates.
However, as the new crop supply started to reach the market, hydrous prices plunged 15% (from April 1 to April 23). S&P Global Platts assessed hydrous ex-mill Ribeirao Preto at Real 1,830/cu m on Monday, the lowest since late September.
