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USDA GAIN: Oilseeds, Cotton, Sugar, Grain and Feed


08 October 2012

USDA GAIN: Brazil Sugar Semi Annual 2012USDA GAIN: Brazil Sugar Semi Annual 2012

This report updates BR12005. Brazil’s MY 2012/13 sugarcane crush is estimated at 570 mmt, up 5 mmt from the previous estimate (565 mmt) due to improved weather conditions in the Center-South region. Approximately 49.1 percent of the crop should be diverted to sugar, up 1 percentage point relative to MY 2011/12 due to continued strong international demand for sugar. Total exports for MY 2012/13 are forecast at 25 mmt, raw value, similar to MY 2011/12 (24.65 mmt).
USDA GAIN Report - Oilseeds, Cotton, Sugar, Grain and Feed

Production:

Sugarcane Production, Area and Yield

The Agricultural Trade Office (ATO/Sao Paulo) estimates total Brazilian sugarcane crush for marketing year (MY) 2012/13 (May-April) at 570 million metric tons (mmt), up 5 mmt from the previous estimate.

Total sugarcane production in the center-south (CS) has been revised upward to 518 mmt, up 18 mmt from previous figure, due to likely higher agricultural yields than previously expected, a consequence of steady rainfall during April through June. The harvest is likely to end in December and approximately 8 mmt of sugarcane is likely to be left in the fields.

The North-Northeast (NNE) is expected to crush 60 mmt of sugarcane, down 5 mmt from the previous season due to weather related issues. The crush begun in August for minor producing states and the harvest should extend though March.

According to the Sugar and Alcohol Millers Association of Sao Paulo State (UNICA), 307.6 mmt of sugarcane were crushed in the CS from March through September 1, down 9 percent compared to the same period in 2011. UNICA reports that 18.7 million tons of sugar, tel quel, and 11.9 billion liters of ethanol were produced through September 1, quite below 2011 levels (20.4 million tons of sugar and 13.8 billion liters of ethanol). These numbers also show that more sugarcane has been diverted toward sugar production (49.2 percent compared to 47.7 percent in 2011).

Total area planted to sugarcane and sugarcane area for harvesting for MY 2012/13 are estimated at 9.75 and 8.7 million hectares, respectively. The agricultural yield in MY 2012/13 is estimated at 66.4 metric tons (mt)/hectare (ha), up 5 percent relative to the previous season (63.1 mt/ha), due to higher renewal rate of the sugarcane fields (20 percent) and good rainfall during April through June. Industrial yields are estimated at 135 kg of TRS (total reducing sugars)/mt of sugarcane, down 1.6 kg/mt compared to MY 2011/12 (136.6 TRS/mt) due to steady rainfall during the second quarter of 2012.

Sugarcane and Ethanol

Total sucrose (total reducing sugar, TRS) content destined for sugar and ethanol production is estimated at 49.1/50.9 percent for MY 2012/13, compared to 48.07/51.93 percent for MY 2011/12, due to higher profitability provided by sugar, a consequence of steady demand in the international markets.

ATO/Sao Paulo estimates sugar production in MY 2012/13 at 37.5 mmt, raw value, up 1.35 mmt, raw value, from MY 2011/12, due to higher availability of sugarcane for crushing. The tables below show monthly sugar production for the state of Sao Paulo and the CS region for the 2008/09 to 2012/13 crops, as reported by UNICA.

Based on the aforementioned sugar/ethanol breakdown, Post estimates total ethanol production for MY 2012/13 at 22.3 billion liters (8.9 liters of anhydrous and 13.4 billion liters of hydrous ethanol), similar to 2011/12 (8.9 billion liters of anhydrous and 13.7 billion liters of hydrous ethanol).

Estimates released by the Brazilian Ministry of Agriculture, Livestock and Supply (MAPA), place cumulative alcohol production for the 2012/13 crop through August 1, 2012, at 8.5 billion liters – 3.1 billion liters of anhydrous ethanol and 5.4 billion liters of hydrous ethanol. The tables below show sugarcane, sugar and ethanol production by state for the 2011/12 and 2012/13, as reported by MAPA.

In spite of the steady increase in the flex-fuel vehicle (FFV) fleet, hydrous ethanol production has been severely limited by the high prices at the pump and the trend towards sugar production to meet strong international demand.

The domestic demand for ethanol for MY 2012/13 is projected at 22.2 billion liters, similar to MY 2011/12 (22.4 billion liters). The table below shows the average prices for gasoline and ethanol as well as the price ratio for January-February (off-peak) and July-August (peak season) 2009, 2010, 2011 and 2012. The 70 percent ratio between ethanol and gasoline prices is the rule of thumb in determining whether flex car owners will choose to fill up with ethanol (price ratio below 70 percent) or gasoline (price ratio above 70 percent).

Note that the ethanol/gasoline ratio has been over 70 percent in several Brazilian states and cities, even during the peak of the season, thus favoring gasoline consumption.

Sugarcane, Sugar and Ethanol Prices in the Domestic Market

The State of Sao Paulo Sugarcane, Sugar and Alcohol Growers Council (CONSECANA) reports that the cumulative average sugarcane price for the 2012/13 crop (April-August) for the state of Sao Paulo, in reais, is R$ 0.4858 per kg of TRS, or R$ 62.90 per ton of sugarcane, down R$ 2.10 per ton compared to the same period (April-August) for the 2011/12 crop (R$ 0.4904 per kg of TRS, or approximately R$ 65 per ton of sugarcane). Note that CONSECANA’s prices are based on both sugar and ethanol prices in domestic and international markets and these have been considerably better in the current crop season compared to the previous year.

The Crystal Sugar and Ethanol Indexes released by the University of Sao Paulo’s College of Agriculture "Luiz de Queiroz" (ESALQ) follow. The Crystal Sugar Index tracks crystal sugar prices in the domestic spot market. The Ethanol Indexes track anhydrous and hydrous prices received by producers in the domestic spot market. Prices have remained stable even during the peak of the crushing season due to relatively tight supply of sugarcane.

Consumption:

There is no official source for domestic consumption of sugar in Brazil. ATO/Sao Paulo estimates for the Brazilian sugar consumption in MY 2012/13 remains unchanged at 11.7 mmt, raw value, based on updated information from post contacts.

Trade:

Sugar Exports

Brazilian sugar exports for MY 2012/13 are estimated at 25 mmt, raw value, similar to MY 2011/12 (24.65 mmt). Raw sugar exports should contribute 19.65 mmt of total exports. Refined exports should account for 5.35 mmt, raw value.

Ethanol Exports

For MY 2012/13, Brazilian ethanol exports are estimated at 2.5 billion liters, up 585 million liters compared to the previous season (1.915 billion liters), due to expected increase of exports of fuel ethanol to the U.S. The tables below show ethanol exports for MY 2011/12 and MY 2012/13 (May-August), as reported by the Brazilian Secretariat of Foreign Trade (SECEX).

Ethanol Imports

ATO/Sao Paulo estimates Brazilian ethanol imports during MY 2012/13 at 250 million liters, a sharp drop compared to MY 2011/12 (1.4 billion liters) due to expected lower supply from the U.S. The tables below show ethanol imports for MY 2011/12 and MY 2012/2013 (May-August), as reported by the Brazilian Secretariat of Foreign Trade (SECEX).

Stocks:

Sugar ending stocks for MY 2012/13 are estimated at 515,000 mt, raw value. Negative stocks in the previous marketing years have been balanced by the early start (March/April) of the sugarcane harvest in the CS region as opposed to the official beginning of the season (May).

Policy:

In October 2011, the percentage of ethanol blended to gasoline dropped from 25 to 20 percent, due to lower availability of the product, a consequence of the drop in the size of the sugarcane crop. The aforementioned percentage should remain unchanged at least until the beginning of the 2013/14 sugarcane crop. According to Provisional Measure (Medida Provisoria – MP) #532 of April/2011, the percentage of ethanol blended to gasoline can vary from 18 to 25 percent.

October 2012

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