May 19, 2022

First Month of Sugarcane Harvest in Brazil Disappoints

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

The 2022/23 Brazilian sugarcane harvest season started on April 1st and thus far, the first month's harvest has been disappointing. According to Brazil's Union of Sugarcane Industries (Unica), as of the end of April, 180 sugarcane facilities in Brazil have started processing sugarcane compared to 207 facilities last April. The reason for the slow start is being attributed to the less-than-normal rainfall in the sugarcane area of south-central Brazil since mid-2021.

Unica reported that 29 million tons of sugarcane were processed during April, which was down 35.8% compared to last April. During April of 2022, Brazil produced 1.06 million tons of sugar, down 50.6% and 1.49 billion liters of ethanol, down 26.8% compared to the prior year.

Sugarcane producers have adjusted their facilities to produce more ethanol and less sugar to take advantage of higher ethanol prices. During April, 35.4% of the sugarcane went to sugar production compared to 42.6% last year. High international fuel prices have helped to sustain higher prices for E100.

Analysts disagree if ethanol production will continue to be favored over sugar production for the remainder of the sugarcane harvest season which will end in November or December. The mix between ethanol and sugar will determine how much sugar will be produced in south-central Brazil. The estimates for 2022/23 sugar production in south-central Brazil range from 29 to 32 million tons.

If south-central Brazil ends up producing 29 million tons of sugar, the world may have a sugar deficit. If south-central Brazil produces 32 million tons of sugar, the world should have a small surplus.

Sugar prices on the New York Exchange have moved higher in recent days, which would indicate that traders feel Brazil's sugar production in 2022/23 could be on the low end of the estimates.

The final sugar production will also depend on the weather in south-central Brazil. Currently, the region is in the grip of the coldest temperatures thus far this year. Light frosts were reported in the sugarcane fields of Sao Paulo and Mato Grosso do Sul on Wednesday morning. The forecast is calling for additional potential frosts on Thursday morning and Friday morning.