Brazil sacrificing ethanol to avoid larger sugar fall, say analysts - Reuters

03-May-2021 05:42:43 PMBRAZIL-SUGAR/CROPS 

 Recasts, adds projections from JOB and comments from analysts

    By Nayara Figueiredo and Marcelo Teixeira.

    SAO PAULO/NEW YORK, May 3 - Reuters - Brazilian sugar cane

processors are likely to give an unprecedented preference to

sugar over ethanol in their industrial strategies in the new

season as they try to avoid a larger decline in the production

of the sweetener.

    According to fresh estimates on Monday, mills in Brazil s

center-south -CS- region could earmark the highest percentage of

cane for sugar production since 2012, at 48.2%, said JOB

Economia consultancy analyst Julio Maria Borges.

    Most Brazilian mills have flexibility in cane allocation 

between sugar and ethanol, a decision they take depending on

market prices and their sales commitments for the products.

    This year, mills sold a lot of sugar in advance as futures

prices rose. But the cane crop fell due to lack of

rains.  

    Mills will try hard to keep sugar production close to

levels seen last year, so the smaller cane crop will hit ethanol

the hardest, said Borges, who expects cane-based ethanol output

to fall 11.8% while sugar production should fall only

3.3%.

    As a result, Borges says, Brazil should export 24% less

ethanol in 2021/22 -April-March-.

    U.S. broker and analyst StoneX said on Monday it sees

Brazil s CS cane crush in a range between 567 and 578 million

tonnes, compared to 586 million tonnes previously.

    StoneX analysts Marina Malzoni, Rafaela Souza and Natalia

Silva said, however, that they expect sugar output to average

not much less than its previous view of 36.1 million tonnes,

despite the smaller crush, saying mills are likely to divert as

much cane to sugar production as possible. 

    There are indications that Brazilian mills plan to extend

the crushing period -this season-, crushing cane volumes below

capacity to be able to earmark more raw material to sugar

production, the broker said in a note to clients.

    StoneX said Brazil s ethanol supply balance is set to be

very tight in 2021/22, driving up biofuel prices through the

season.

 Reporting by Nayara Figueiredo and Marcelo Teixeira

Additional reporting by Roberto Samora; Editing by Hugh Lawson

and Grant McCool

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