1 November 2011
The Brazilian Sugarcane Industry Association (UNICA) in partnership with the Center for Sugarcane Technology (CTC) and other producer associations has revised the total projected sugarcane crush for the 2011/2012 harvest in the South-Central region of the country. The new forecast points to a total of 488.50 million tons, down 4.26% from a previous revised forecast issued in August of this year (510.24 million tons) and a drop of 12.29% from the 2010/2011 harvest (556.95 million tons).
The reduction is expected because of lower agricultural productivity. According to data compiled by the CTC, September yields reached 70.60 tons of sugarcane per hectare, a drop of 18.20% compared to the same period in 2010. The new projection for the 2011/2012 harvest in the South-Central region calls for less than 70 tons per hectare, a reduction of almost 20% compared to the historical average of 85 tons per hectare.
Major factors that explain the lower yields are the advanced age of the cane field and unfavorable weather conditions for plant development, including prolonged droughts during the winter months that affected the last two harvests and the occurrence of frost and flowering at the beginning of the current harvest.
Other factors contributing to lower yields include: (i) the advance of mechanized planting and harvesting in non-systematized areas; (ii) the incidence of new diseases such as orange rust; (iii) an increase in the level of infestation involving specific pests; and (iv) increased production in regions with lower productivity potential.
Falling yields will be a feature of all sugarcane producing states in the South-Central region in the current harvest. However, the impact of a smaller harvest than expected on the supply of sugarcane should be lower in states where there was a higher rate of expansion in the harvested area, such as Goias, Mato Grosso do Sul and Mato Grosso.
In São Paulo, the country's top producing region, agricultural productivity is the lowest in 20 years and the decline in crushing is expected to exceed 50 million tons, with emphasis on the regions of Ribeirão Preto, São José do Rio Preto and Araçatuba. The loss represents about 80% of the expected drop in crushing for the entire South-Central region in the 2011/2012 harvest.
According to UNICA's Technical Director, Antonio de Padua Rodrigues, "the variables mentioned, along with the expectation of only four new crushing mills launching next year, should result in a very slight increase in crop production for the 2012/2013 harvest." Investment in the renewal of sugarcane fields are the best alternative to accelerate the growth of ethanol and sugar production as of the 2013/2014 harvest, as there is significant overcapacity in the industry and a lack of raw material, he warns.
Quality of Raw Material
The updated forecast for total recoverable sugars (ATR) for the 2011/2012 harvest per ton of cane is now projected at 137.30 kg, up 1.63% compared to the 135.10 kg forecast in the previous revision. A higher concentration of sugars in the plant should minimize the expected fall in crushing. Thus, the effective reduction in the total amount of sugar and ethanol produced should be limited to 2.70% below the value in UNICA’s August forecast (67.07 million tons against 68.93 million of ATR previously projected).
UNICA estimates that 51.81% of all harvested sugarcane will directed to ethanol production in the 2011/2012 harvest, while 48.19% will be used for sugar production. Total sugar production is expected to reach 30.80 million tons, down 2.44% from the previous estimate, and 8.06% below the 33.50 million tons produced in the 2010/2011 season.
Ethanol production is now projected to reach 20.39 billion liters, down 2.93% compared to the August projection and 19.68% less than the 25.38 billion liter output in the previous harvest. The total to be produced in the current harvest should be split into 7.83 billion liters of anhydrous and 12.56 billion liters of hydrous ethanol.
The projected decrease in ethanol production will be offset by imports, which have already been taking place. From early April to late September, Brazil imported 567.77 million liters of ethanol and by the end of the harvest, the volume should reach about 1.20 billion liters.
The projected ethanol production is in line with figures discussed in meetings organized by the Federal Government, with representatives from producers and distributors, to monitor trends in supply and demand of the biofuel.
According to Rodrigues, "the harvest continues to be closely monitored by all stakeholders and there is a consensus that if sales trends are maintained, the projected totals, particularly for anhydrous ethanol, are sufficient to fully meet domestic market demand until the beginning of next harvest."
Demand for anhydrous ethanol in the country is projected to increase 10% in the 2011/2012 harvest compared to the previous year, despite a reduction in the amount of anhydrous ethanol blended into gasoline which came into effect in October. By contrast, the projected consumption of hydrous ethanol has fallen by more than 30% compared to the previous harvest.
Rodrigues explains that "this year’s projected ethanol output will be lower than in the 2007/2008 harvest, a time when the fleet of flex-fuel vehicles amounted to less than half the current fleet." Nevertheless, extreme price and consumption patterns for ethanol have not been observed, showing that significant advances have been achieved in terms of how the market functions, he concluded.
The new projection points to total sugar exports reaching 21.20 million tons in the current harvest, down 13.96% compared to a year ago. Ethanol exports should decrease 6.62% compared to last year’s total, ending up at 1.65 billion liters.
A significant share of the ethanol being exported refers to commitments signed by companies in the past which are now being met. Although imports during the current harvest are making up for crop failures, Brazil continues to be a net exporter of ethanol.
The data released in this harvest update was compiled and analyzed by UNICA, with figures provided by the following syndicates and associations of producers from the South-Central states:
- ALCOPAR — Association of Producers of Ethanol and Sugar in the State of Paraná
- BIOSUL — Association of Bioenergy Producers of Mato Grosso do Sul
- SIAMIG — Syndicate of Ethanol Manufacturing Industry in the State of Minas Gerais
- SIFAEG — Syndicate of Ethanol Producers of the State of Goiás
- SINDAAF — Fluminense Syndicate of Sugar and Ethanol Producers
- SINDALCOOL — Syndicate of Sugar and Ethanol Industry of Mato Grosso
- SUDES — Society of Plants and Distilleries of the State of Espirito Santo