Sao Paulo — The amount of sugarcane crushed in the first half of October in Brazil's key Center-South region is expected to be 25.05 million mt, down 23% year on year and 9% lower than the previous two-week period, an S&P Global Platts survey of analysts found Tuesday.

This would be the lowest volume of cane crushed in the 2018-19 season since the start of the season when 22.25 million mt were crushed in H1 April.

Industry association UNICA will release its official production figures for later this week.

 

The lower volume of sugarcane crushed explained by sources as a result of the days lost to heavy rainfall in the region.

 

Analysts surveyed by Platts expect an average of 5.7 days lost to rain and maintenance. This compares 5.5 days lost in H2 September and only 3.1 days in the year-ago period. This is would be the second two-week period in which the crushing of the current crop falls short of that observed in the previous crop year.

 

If analysts' expectations were realized, the cumulative cane crush thus far this season (April 1-October 16) would reach 482.98 million mt, down 3.7% year on year.

 

According to S&P Global Platts Analytics, the decline compared to a year ago is expected to widen as we reach the tail end of the crop.

 

This is attributed to a combination of recent drops in agricultural yields, the pace of mills closures and heavy rains from the start of October and forecast to continue into November.

 

The cane's total recoverable sugar (ATR) is expected to show a significant drop due to the wet weather at 142.96 kg/mt, down 4.65 kg/mt from the previous two weeks. That figure would be down 3.43 kg/mt year on year. From the analysts surveyed by Platts the range was between 141.3 kg/mt to 145 kg/mt.

 

The proportion of cane used for sugar production in the Center-South in H1 October is expected have further decreased in comparison to the 33.08% in the previous two weeks period at 32.08%, according to the survey. It would also be extremely lower than the 43.88% registered in the year-ago period.

 

This would be a new record low sugar mix for any H1 October period and the lowest since the start of the season when the mix reached 31.4% in H1 April.

 

As a result, sugar production is expected to total 1.08 million mt in H1 October, a plunge of 45.8% year on year and 16% lower from H2 September. Cumulative sugar production between April 1 and October 16 would reach 23.35 million mt, decreasing almost 26% year on year.

 

As more of the sugarcane is expected to continue to be used for ethanol production compared with last year, hydrous ethanol output in H1 October is expected to reach 1.01 billion liters. This would be up 14.5% from a year ago but 10% lower from H2 September.

 

Based on the analyst survey, April 1-through-October 16 cumulative hydrous ethanol production would be almost 49% higher than the year-ago period at 17.64 billion liters.

 

Despite the recent drops in production, Brazilian hydrous ethanol prices in the major fuel-consuming region of the Center-South eased over the past week, triggered by lower crude oil prices and a strong valuation of the Brazilian real against the US dollar which ultimately translate to lower gasoline prices in country.

 

Platts assessed hydrous ethanol ex-mill Ribeirao Preto, including taxes, at Real 2,180/cu m on Monday, down Real 60/cu m or 3% on the week.

 

Brazil's state-led Petrobras announced on Tuesday it was lowering gasoline ex-refinery prices by 3.8% to Real 1.9855/liter. This is the lowest since mid-August.