By Nayara Figueiredo
SAO PAULO (Reuters) – Sugar production in south-central Brazil is expected to reach 33 million tonnes, up 2.8% from the previous cycle, consultancy Datagro estimated on Wednesday, citing that the new harvest continues “threatened” by climate problems.
“The estimate of 562 million tons for sugarcane crushing has a downward bias. The first third of the crop is in worse condition due to the fire and frosts of 2021 and consequent failures,” said Datagro’s president, Plínio Nastari, at an event in Ribeirão Preto.
According to the consultancy, 44.7% of the raw material will be destined for the production of sugar, against 44.9% in the previous season.
Nastari said, however, that there is a “question mark” that can influence the production mix of plants, which is the government’s definition of interference in Petrobras’ fuel prices – something that would influence ethanol prices.
“Uncertainty about fuel pricing policy in Brazil… will continue to bring uncertainty to the resumption of investments in biofuel production,” he said.
The center-south’s total ethanol production (including corn biofuel) is expected to reach 29.8 billion liters in 2022/23, compared to 27.7 billion liters in the previous cycle.
Datagro’s president considered the drop in industrial yield an important point for the current cycle, whose estimate is 138 kilos of total recoverable sugar (ATR) per ton of cane, against 142.9 in the previous harvest.
The total ATR for the season was estimated at 77.6 million tonnes, up from the 75 million seen in the past season, but with a downward bias, said the expert.
“So it is still a difficult situation, the year 2021/22 was a year of very strong reduction in the ATR supply compared to 20/21… We are still in a situation very close to what was experienced in 2021/22.”
GLOBAL SCENE
With higher sugar production in Brazil and India, two main global suppliers, Datagro projects a surplus of 1.15 million tons of the sweetener in the global market in 2022/23, compared to a deficit of 1.2 million in the previous cycle.
According to Datagro, Indian sugar production in 2021/22 was revised from 32 million to 33 million tons, with strong export expectations at 8 million.
As for the conflict between Russia and Ukraine, Nastari said that the impacts on the sugar market have been the follow-up to oil prices.
He stated that the increase in oil prices is one of the main bullish factors for the current market, as well as the irregular weather that affected the Brazilian crop, in the central-south region.
Among the bearish factors, Nastari cited higher-than-expected sugar production in India.
He also pointed to the increase in fertilizer costs resulting from the war in Ukraine – considering that Russia is the leader in the export of this input.
“In sugar, these two countries do not directly affect the balance of supply and demand… but the turmoil over the invasion of Ukraine brings uncertainty to energy markets.”
(By Nayara Figueiredo)
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