Oct 29, 2021

Brazil's Sugarcane Production Down, Corn Ethanol Production Up

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Reduced acreage and poor weather is resulting in a decline of 9.5% in Brazil's 2021/22 sugarcane production according to Conab's 2nd assessment of Brazil's sugarcane production. The sugarcane acreage in Brazil declined 4.3% in 2021/22 and the sugarcane yield declined 5.5%. The sugarcane suffered from a historic drought in 2021 and from a series of frosts in June and July when parts of south-central Brazil registered their coldest temperatures in twenty-five years. The poor weather not only impacted this year's crop, it will also impact the 2022/23 sugarcane crop as well.

According to the Union of Sugarcane Industries (Unica), processors devoted a higher percentage of the sugarcane to sugar production in 2021/22 to the detriment of ethanol production. The total ethanol production in Brazil (both sugarcane and corn) is expected to decline 10.8%. The amount of ethanol produced from sugarcane is down 13,1%, while the amount of ethanol produced from corn is expected to be up 11.2% compared to last year.

The state of Mato Grosso is the largest corn ethanol producing state in Brazil responsible for 85% of Brazil's corn ethanol production. Corn ethanol production has increased in Mato Grosso every year since the first corn ethanol facility in Brazil started operations in 2017 in the city of Lucas do Rio Verde in central Mato Grosso. In September alone, corn ethanol production in Mato Grosso was up 41% compared to a year earlier.

The Mato Grosso Institute of Agricultural Economics (Imea) estimates that 7.7 million tons of Mato Grosso's 2021/22 corn production will be used for ethanol production. Conab is estimating that Mato Grosso will produce 39.9 million tons of corn in 2021/22, so approximately 19.3% of the corn in the state will be used for ethanol production. That is an amazing percentage given the fact that corn ethanol production in the state only started in a major way 5 years ago.

During the first six months of the 2021/22 sugarcane season (April through September), Brazil exported 14.6 million tons of sugar, which was down 12.3% compared to a year earlier. During the same period, Brazil exported 971 million liters of ethanol, which as down 33.6% due to a lack of supply. During the first six months of the season, Brazil imported 81.4 million liters of ethanol, which was down 68.7%.

Sugarcane harvesting in Brazil usually starts in late March or early April and it ends in November or December. The harvest is ending earlier than normal this year due to the reduced production.