SAO PAULO (Reuters) - Brazil’s center-south, the world’s largest sugar producing region, is expected to see a smaller cane crop next year as adverse weather conditions impacted plant development across the region, leading consultancy Datagro said on Tuesday.
Brazil’s center-south 2018/19 cane crop was projected to fall to 580 million tonnes from 601 million tonnes in 2017/18, which was already a smaller crop compared to the previous production of 617 million tonnes.
Datagro’s chief analyst Plinio Nastari said he expects a big change in the production mix towards ethanol, which will lead to sugar production in 2018/19 falling to 32.6 million tonnes in the center-south versus a revised 36.4 million tonnes expected in 2017/18.
“We had up to 120 days without rains in some areas this year. That caused fires and irregular development of cane fields,” Nastari told reporters during a sugar industry conference ahead of the Sugar Dinner in Sao Paulo later this week.
Other analysts have different views. Agroconsult, for example, expects a crop of 610 million tonnes of cane for the center-south next year, saying better crop care by producers would boost agricultural yields.
Despite a smaller cane crop and sugar output, Datagro projected stable cane-based ethanol production at 25.3 billion liters next season, as mills are expected to allocate more cane to the biofuel than to sugar.
The consultancy sees mills earmarking 44 percent of the cane to sugar making in 2018/19 compared to 47 percent expected for the current crop.
“We were surprised to see how quick mills changed production mix lately,” Nastari said.
Mills in Brazil have been reducing sugar production and increasing ethanol volumes since the biofuel is giving better returns currently. They have some flexibility to change the production mix, usually going from minimum of 40 percent to maximum of 60 percent for ethanol making.
Considering the sharply smaller center-south production, Datagro slashed its view for the global sugar supply balance in the 2017/18 cycle (October-September). The consultancy cut its previous estimate of a surplus of 2.95 million tonnes (raw value) to a surplus of 430,000 tonnes.
Reporting by Marcelo Teixeira, editing by Louise Heavens and Chizu Nomiyama