Report Highlights: 

The Brazilian MY 2014/15 sugarcane crop is estimated at 619 mmt, down 5 mmt from MY 2013/14, mainly due to weather related problems in the center-southern producing region. Approximately 45 percent of the crop should be diverted to sugar, down 0.5 percentage point compared to the previous season due to better ethanol prices. Total exports for MY 2013/14 are forecast at 24 mmt, raw value, down 1.25 percent compared to the previous estimate.

Production 

The Agricultural Trade Office (ATO/Sao Paulo) estimates marketing year (MY) 2014/15 Brazilian sugarcane production at 619 million metric tons (mmt), down 5 percent from the previous season (650 mmt). The Center-South (CS) region is expected to produce 565 mmt of sugarcane, a 2 percent decrease compared to the previous estimate, due to lower agricultural yields in the states of Sao Paulo and Minas Gerais as a result of irregular weather conditions (drought). According to post contacts, approximately 5 to 10 million metric tons of sugarcane are likely to be left in the field, especially in the states of Goias and Mato Grosso. North-Northeastern (NNE) production for MY 2014/15 remains at 54 mmt, similar to MY 2013/14. 

Industrial yield for MY 2014/15 is estimated at 134.1 kg of TRS (total reducing sugars)/mt, up 3.3 kg compared to the previous figure, as a consequence of the dry weather in the states of Sao Paulo and Minas Gerais. TRS content diverted for sugar and ethanol production for MY 2014/15 is estimates at 45 and 55 percent, respectively, as a consequence of better profitability for ethanol production. 

ATO/Sao Paulo estimates the MY 2014/15 sugar production at 35.80 mmt, raw value, down 1 mmt compared to previous estimate. The CS states should account for 32.6 mmt, raw value, whereas the NNE output is preliminarily forecast at 3.2 mmt of sugar, raw value, similar to MY 2013/14. No changes have been made to the MY 2014/15 ethanol production figure which is estimated at 25.5 billion liters (12.8 billion liters of anhydrous ethanol and 12.7 billion liters of hydrated ethanol). 

Crystal Sugar and Ethanol Indexes released by the University of Sao Paulo’s College of Agriculture "Luiz de Queiroz" (ESALQ) track crystal sugar, anhydrous and hydrated prices received by producers in the domestic spot market.

Consumption

Brazilian sugar consumption for MY 2014/15 remains at 11.5 mmt, raw value, up 240,000 mt from MY 2013/14 (11.26 mmt), reflecting the Brazilian population growth and a continued expansion in the food processing sector. 

Exports 

ATO/Sao Paulo forecasts sugar exports for MY 2014/15 at 24 mmt, raw value, down 1.25 mmt from previous estimated due to lower expected sugar production, therefore lower expected exportable supply. Raw sugar should account for 18.95 mmt, raw value, whereas the remainder represents exports of refined sugar. 

Stocks 

Total sugar ending stocks during MY 2014/15 are projected at 105,000 mt. Note: Negative stocks are the result of harvest/crush beginning in March/April before official marketing year. 

Policy 

In September 2014, President Dilma Roussef signed the Provisional Measure that increases the maximum ethanol blend to gasoline from 25 to 27.50 percent. The law sets a broader ethanol blend range to gasoline, but does not authorize the effective increase of the 25 percent blend to a higher value