UPDATE 1-Brazilian sugar mills begin cane crushing early - Unica

Thu Mar 13, 2014 12:50pm EDT

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By Fabiola Gomes

SAO PAULO, March 13 (Reuters) - Brazilian sugar cane mills struggling with growing debts have begun the April-March cane crushing season early as they try to generate cash and take advantage of attractive domestic ethanol prices, cane industry association Unica said on Thursday.

Analysts have been paring back their expectations of Brazil's main center-south sugar cane crop due to dry, hot weather in recent months that is likely to curb the crop's potential.

Consequently, sugar and ethanol output are likely to fall or remain flat compared with the 34.3 million tonnes and record 25.5 billion liters (6.7 billion gallons) produced last year, respectively.

As a result, Brazil is likely to turn to the international fuels markets to import more gasoline this year to keep up with growing domestic demand and expects no significant increase in ethanol production, Unica's technical director, Antonio de Padua Rodrigues, told Reuters.

He said that as many as 40 mills will be crushing by the end of March, typically the final month of the January-March interharvest period in which mills typically remain idle or conduct maintenance due to the wet conditions during the peak of the rains season.

Brazilian cane mills have been struggling under weak sugar and ethanol prices over the past year, prompting an increasing numbers of mills to enter bankruptcy protection while they restructure their debts with creditors. Some of the more than 44 mills that have closed over the past few years will never reopen.

"The financial situation is forcing in large part the mills to start harvesting early," Rodrigues said. "First to generate cash flow and second to capitalize on the high prices and tight supply of ethanol on the domestic market."

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