Dec 11, 2018
78/206 Mills in South-Central Brazil Produced only Ethanol in 2018
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
As the 2018 sugarcane harvest in south-central Brazil starts to wrap up, it has been a good year for ethanol production, but a bad year for sugar production. The Union of Sugarcane Industries in Brazil (Unica) reported that of the 206 sugar/ethanol mills in south-central Brazil, 78 mills will end the harvest season without producing a single kilogram of sugar because 100% of the sugarcane was processed into ethanol. The number of mills dedicated to only ethanol production was up 25% this year compared to last year.
Hydrated ethanol production, which is ethanol used directly as fuel and not blended into gasoline, set a record for the last 11 years. From April 1st when the 2018 harvest started until November 15th, the mills in south-central Brazil produced 18.85 billion liters of hydrated ethanol, which was up 20% compared to a year earlier and 5% more than in 2010, which was the previous record large production
While hydrated ethanol production is record high, sugar production fell dramatically in 2018. From April 1st until November 15th, the mills in south-central Brazil produced 24.3 million tons of sugar compared to 36.0 million tons last year, which is a decline of 32%. Last year, the Brazilian mills produced the most sugar since 2008.
The reason for the reduced sugar production is of course low international sugar prices and a better political environment for ethanol production. The average mill in south-central Brazil dedicated 60% to 65% of its production to ethanol and the remainder to sugar. Going forward into 2019, the percentage of the production dedicated to ethanol may vary one way or the other, but the average mill will still be more dedicated to ethanol production than to sugar production.
The sugarcane sector in south-central Brazil has been under financial stress for the past 10 years and that does appear to be changing any time soon. This is not good news for the state of Sao Paulo where 150 of the 206 sugar/ethanol mills in south-central Brazil are located.