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 Rainfall during much of June in the sugarcane growing areas of South-Central Brazil reduced the number of days available for cane crushing at several mills, which lowered the sucrose content as well as the volume of harvested cane as well, according to the Brazilian Sugarcane Industry Association (UNICA)'s twice-monthly harvest reports.
The state most affected was Paraná, where only 61.3% of available harvest days were utilized, resulting in about 11.5 days stopped. The utilization rates were also low in Mato Grosso do Sul, which came in at 68.9% during the month. In the top cane producing state, São Paulo, utilization reached 79.5%, similar to the average for the South-Central region, which accounts for 88% of Brazil's total sugarcane harvest.
In the second half of June, the harvest totaled 33.23 million tons of sugarcane, 0.74% less than in the same period a year before. The reduction would have been even greater during that two-week period if not for the entry of 10 mills that began production in the current harvest.
Of these, three are new mills making their very first harvest. In all, four new mills started production in June and another two in the first half of July. Among previously operating mills, twenty have yet to begin their harvest in the 2009/10 crop year.
Total recoverable sugars obtained per ton of sugarcane (known as ATR in Portuguese) reached 133.03 kg per ton of cane crushed in the second half of June, 1.61% lower than in the same period last year.
The total accumulated since the beginning of the crop year is 123.98 kg per ton of cane crushed, 0.01% above accumulated amounts for the same period a year ago. Since the beginning of the harvest, the total sugarcane crush stood at 176.22 million metric tons on June 30, a 24.77% increase compared to the same period in the previous harvest.
Of the total sugarcane harvested in the second half of June, 44.91% was utilized to make sugar, with production reaching 1.89 metric tons in the period, a 6.6% increase compared to the same period in the last crop year.
Since the beginning of the current harvest, the South-Central region has produced 8.67 million metric tons of sugar, 33.67% above last year's total at this time. Up to now, 41.63% of the sugarcane harvest in South-Central Brazil this year went to sugar production.
Ethanol production in that period reached 1.424 billion liters, 8.2% below the same period in the last crop year. Of this total, ethanol production was split into 359 million liters of anhydrous ethanol and 1.065 billion liters of hydrous ethanol.
From the beginning of this harvest to the end of June, anhydrous ethanol production in South-Central Brazil totaled 1.532 billion liters, down 23.84% from the same period a year before. Hydrous ethanol, used to fuel Brazil's rapidly expanding fleet of flex-fuel vehicles reached 5.950 billion liters, up 40.29% from the same period in last year's harvest.
Sugar exports in the entire country during the first three months of the harvest (April through June) reached 5.69 million tons, compared to 4.23 million tons during the same period last year. VHP type sugar accounted for 74% of all sugar exports since the start of the harvest, compared to 68% during the same period last year.
Total ethanol exports since the beginning of the harvest totaled 985 million liters, compared to 1.1 billion liters in the same period last year. There has been a significant reduction in exports of anhydrous ethanol to the United States, which totaled only 22.3 million liters during the first three months of the harvest, compared with 376.2 million liters of anhydrous ethanol shipped to the U.S. during the same period last year.
Exports to Caribbean countries and to Europe remain at about the same levels as last year. The reduction in direct exports to the United States has been offset by a large increase in exports to India, Japan and South Korea.
In the Brazilian market, demand for anhydrous ethanol has been stable, even with increased sales of flex-fuel cars. As for hydrous ethanol, in the first three months of the harvest (April, May and June) sales have increased 25% compared to the same period a year before, with shipments by producing mills totaling 1.92 billion liters, up 1.5% from the previous month (May).
Despite the slight improvement observed in prices paid to producers, ethanol prices remain below production costs. Three factors explain the increase in ethanol demand in the domestic market:
* The expanding flex-fuel vehicle fleet in Brazil, which now accounts for over one-third of the country's entire light vehicle fleet;
* Competitive ethanol prices at the pump, as compared to the price of gasoline; and,
* On the supply side, a harvest that is surpassing expectations, particularly in June, both from the standpoint of quantity of sugarcane processed as well as the volume of recoverable sugars per ton of cane crushed.
It is important to note that despite better prices paid to ethanol producers, as observed in the wholesale market in the last few weeks, prices for consumers at the pump remain competitive with gasoline.
The Brazilian Sugarcane Industry Association (UNICA) represents the top producers of sugar and ethanol in the country's South-Central region, especially the state of São Paulo, which accounts for about 50% of the country's sugarcane harvest and 60% of total ethanol production.
In 2008, Brazil produced an estimated 565 million metric tons of sugarcane, which yielded 31.3 million tons of sugar and 25.7 billion liters (6.8 billion gallons) of ethanol, making it the number-one sugarcane grower and sugar producer in the world, and the second-largest ethanol producer on the planet, behind the United States.
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