Sugarcane crush volumes in the key Center-South region of Brazil in the first half of October are expected to total 36.84 million mt, according to a survey of analysts that Kingsman, an agriculture analysis unit of Platts, conducted Wednesday.
The consensus estimate accounts for an average of 2.6 days of crush lost to rain.
Wider analyst expectations for cane crush spanned from 34 million mt to 40 million mt.
Brazilian sugarcane industry group UNICA is expected to release its bimonthly sugarcane harvest data in the next few days. Regarding total recoverable sugar, or ATR, the poll of analysts forecast 141.66 kg/mt, with a wider range from 140 kg/mt to 143.9 kg/mt.
Analysts at Kingsman forecast the cane crush at 37.1 million mt and ATR at 141.7 kg/mt, down 3.94 kg/mt from second half of September.
According to a Platts survey of analysts, the sugar mix in the first half of October is expected to reach 43.25%, up 0.27 percentage point year on year. Since the end of last August, the combination of the international price and the low exchange rate of the Real against the US dollar is favorable for sugar production. The Kingsman analyst forecast is really close to consensus at 43.4% sugar mix.
In terms of ethanol production, the average analyst expectation pointed to total ethanol output of 1.744 billion liters, a decrease of 245 million liters compared with the second half of September. Even with a possible decline in production in the first two weeks of October, this estimate would bring cumulative ethanol production since the start of the season to 1.6% above the same period a year ago at 21.931 billion liters.
Hydrous ethanol production was expected to reach 1.023 billion liters, also down 9.72% year on year. Despite an uptick supported by the 6% increase in gasoline prices bases ex-refinery September 29, sugar is still paying better in the international market. From September 29-October 20, Platts hydrous ethanol ex-mill Ribeirao Preto rose 12.18% from Real 1,560/cubic meter to Real 1,750/cu m.
If the consensus proves correct, accumulated hydrous output in the Center-South will reach 13.677 billion liters, up 1.28 billion liters from a year ago.
In first-half October, anhydrous output is expected to be 721 million liters, slightly down 78 million liters from the prior two weeks. Lower gasoline consumption, capped by higher consumption of hydrous ethanol, has resulted in a plunge in the cumulative production of anhydrous ethanol. Accumulated anhydrous production is expected to reach 8.212 billion liters, down 10.48% year on year.
Brazilian Gasoline C is a blend of gasoline A with 27% anhydrous ethanol.
Although domestic consumption is low, exports in 2015 should remain stable with 2014. According to Kingsman, the total volume may reach 1.42 billion liters, which includes both fuel and industrial ethanol exported out of the Center-South and North-Northeast regions. The devaluation of the Real against the dollar has encouraged more ethanol to be exported in recent months, with the latest government data showing September exports at nearly 174 million liters, up 46% from September 2014. Cumulative Brazilian exports so far this year have recently recovered and are now 5% higher compared with same period last year at 1.12 million liters.
All in all, if a wet climate doesn't hamper the harvesting, mills will try to speed up sugar production, even with the 2015/16 crop moving into its last stage, when low ATR typically boosts the cost of sugar production.
