March 12, 2014

Drought Lowers Prospects for Brazil's Sugarcane Production

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

In spite of an increase in sugarcane acreage in southern Brazil, production in the region is expected to decline by 1% to 5% in 2014/15 due to the hot and dry weather that afflicted the crop during January and early February. A persistent high pressure system in eastern Brazil limited rainfall and resulted in record high temperatures across the region from late-December through early February.

As a result, many organizations have already reduced their estimates for the 2014/15 sugarcane crop by varying amounts. According to Archer Consulting, the total sugarcane production in southern Brazil should be 590 million tons compared to the 595 million produced in 2013/14. They estimate that Brazil will produce 33 million tons of sugar and 25.8 million liters of ethanol in 2013/14.

The Union of Sugarcane Industries in Brazil (Unica) has not yet officially estimated the 2014/15 sugarcane production, but sources indicate that the total production in southern Brazil may decline by 35 to 40 million tons compared to last year (-5.8% to -6.7%).

Copersucar, which is the largest sugarcane producing entity in the world, reduced its estimate for sugarcane production in southern Brazil by nearly 5% to 570 million tons. Copersucar is an association of 47 sugar producing industries in the states of Sao Paulo, Minas Gerais, Parana, and Goias. Late last year, Copersucar's sugar terminal at the Port of Santos suffered widespread fire damage.

Generally, the sugarcane harvest in southern Brazil starts in April and wraps up in December, but the start of the harvest this year will be delayed due to the slow development of the sugarcane.

The state of Parana is the fourth largest sugarcane producing state in Brazil and the producers in the state are usually the first in southern Brazil to start harvesting, but the Sugar and Ethanol Producers Association of Parana (Alcopar) estimates that the start of the sugarcane harvest in the state will be delayed by 20 to 30 days due to the severe drought that hit the northern part of the state in January and early February. The harvest usually starts at the end of February, but this year, it is expected to state at the end of March instead.