Brazil. Sugar Semi-annual. Oct 2013 Nov. 15, 2013
On October 18, 2013, Copersucar’s 10-million-ton capacity export terminal at the Port of Santos suffered extensive fire damage. While repairs to the facility will take an estimated 12-18 months to complete, traders believe that remaining export terminals will generally absorb the lost capacity, but the fire will further complicate Brazil’s already complex logistics. Brazil’s MY 2013/14 sugarcane crush is estimated at 645 mmt, up 5 mmt from the previous estimate (640 mmt) due to improved crop conditions in the Northeast region. Approximately 47 percent of the crop should be diverted to sugar, down 1 percentage point compared to previous estimate. Total exports for MY 2013/14 are forecast at 27.25 mmt, raw value, similar to MY 2012/13 (27.65 mmt).
Sugarcane Production, Area and Yield
The Agricultural Trade Office (ATO/Sao Paulo) estimates total Brazilian sugarcane crush for marketing year (MY) 2013/14 (May-April) at 645 million metric tons (mmt), up 5 mmt from the previous estimate.
Total sugarcane production in the center-south (CS) remains at 585 mmt. The North-Northeast (NNE) is expected to crush 60 mmt of sugarcane, up 5 mmt from the previous season due to improved sugarcane stock conditions.
According to the Sugar and Alcohol Millers Association of Sao Paulo State (UNICA), 406.3 mmt of sugarcane were crushed in the CS from March through September 16, up 16 percent compared to the same period in 2012. UNICA reports that 22.9 million tons of sugar, tel quel, and 17.2 billion liters of ethanol were produced through September 16, representing a 5 and 25.9 percent increases, respectively, compared to 2012 levels (21.8 million tons of sugar and 13.6 billion liters of ethanol). These numbers also show that more sugarcane has been diverted toward ethanol production (55.03 percent compared to 50.5 percent in 2012).
Sao Paulo represents approximately 56 percent of the CS production.
Total sugarcane area planted and harvested for MY 2013/14 remain at 9.8 and 8.8 million hectares, respectively. The agricultural yield in MY 2013/14 is estimated at 73.3 metric tons (mt)/hectare (ha), slightly up compared to the previous figure (72.7 mt/ha), due to better crop conditions in the Northeast. Industrial yields are estimated at 133.72 kg of TRS (total reducing sugars)/mt of sugarcane, down 2.72 kg/mt compared to previous estimate based on updated information from the sugar industry.
Sugarcane and Ethanol
Total sucrose (total reducing sugar, TRS) content destined for sugar and ethanol production is estimated at 47/53 percent for MY 2013/14, therefore sugarcane diverted to sugar is down 1 percentage point compared to previous estimate. As reported by UNICA, the Center South prioritized ethanol production as opposed to sugar even after the continuous and steady devaluation of the local currency, the real, during the past months.
ATO/Sao Paulo estimates sugar production for MY 2013/14 at 38.75 mmt, raw value, down 1.65 mmt, raw value, from previous figure, due to expected lower total sucrose content and higher percentage of sugarcane diverted to ethanol production.
Sugarcane, Sugar and Ethanol Prices in the Domestic Market
The State of Sao Paulo Sugarcane, Sugar and Alcohol Growers Council (CONSECANA) reports that the average sugarcane price for the 2013/14 crop (April-September) for the state of Sao Paulo, in reais, is R$ 0.4439 per kg of TRS, or R$ 58.45 per ton of sugarcane, down R$ 5.09 per ton compared to the same period (April-September) for the 2012/13 crop (R$ 0.4806 per kg of TRS, or approximately R$ 63.54 ton of sugarcane). Note that CONSECANA’s prices are based on both sugar and ethanol prices in domestic and international markets and these have been considerably better in the current crop season compared to the previous year.
The Crystal Sugar Index released by the University of Sao Paulo’s College of Agriculture "Luiz de Queiroz" (ESALQ) follows. The index tracks crystal sugar prices in the domestic spot market. Prices have decreased during the 2013/14 crop following the drop of international sugar prices.
There is no official source for domestic consumption of sugar in Brazil. ATO/Sao Paulo estimates for the Brazilian sugar consumption for MY 2013/14 remains at 11.26 mmt, raw value, based on updated information from post contacts.
Brazilian sugar exports for MY 2013/14 are estimated at 27.25 mmt, raw value, down 2.05 mmt from previous figure due to expected lower sugar availability. Raw sugar exports should contribute 22.1 mmt of total exports. Refined exports should account for 5.15 mmt, raw value.
Sugar ending stocks for MY 2013/14 are estimated at -295,000 mt, raw value, up 400,000 mt from previous estimate. Negative stocks will be balanced by the early start (March/April) of the sugarcane harvest in the CS region as opposed to the official beginning of the season (May).
On October 18, the Copersucar sugar terminal in the port of Santos was damaged by fire. The cause of the fire is being investigated. The incident damaged warehouses and conveyor belts that transport sugar.
Copersucar is comprised of 47 sugar-ethanol producers and the company’s gross income for 2012 reached US$ 4.1 billion. Prior to the incident, Copersucar’s export projection for 2013 was 9 million metric tons of sugar, up 1.8 million tons from 2012. Copersucar had recently inaugurated a new warehouse in the terminal which increased the annual capacity to export sugar to 10 million metric tons.
In addition to losses estimated at 180,000 metric tons of sugar, the company will likely delay fulfilling the contracts. Moreover, industry analysts report that the reconstruction of the sugar terminal should take between 12 and 18 months. Traders believe that the temporary loss in export capacity will generally be offset by other terminals in Santos, but the port will lose some exporting capacity in the next year or so