Brazilian sugar mills further cut in the first half of August the amount of cane earmarked for sugar production to one of the lowest levels ever seen in the center-south region, cane industry group Unica data showed on Friday.
The so-called sugar mix came down to only 35 percent in the period, with mills allocating the other 65 percent to ethanol production, since the biofuel has provided better returns than the sweetener, whose prices are hovering around the lowest in ten years.
This is possibly the lowest amount of cane allocated to sugar production ever in the center-south. It was 50 percent at this time last year, since mills usually tend to produce more sugar in the later part of the season due to higher sugar content in cane. That is not happening this year. "If it were not for that sharp change in the mix, sugar production would have reached 21 million tonnes by now," said Antonio de Padua Rodrigues, Unica's technical director.
Instead, center-south mills produced only 16.4 million tonnes of sugar in the season so far, 20 percent less than at the same time in the previous crop. Sugar and ethanol analyst Plinio Nastari, from Datagro consultancy, said this week that mills that have not hedged their sugar exports when prices were better are now refraining from producing sugar in a bid to avoid losses since current prices are below production costs.
Center-south mills sold 41 percent more hydrous ethanol in the first half of August than seen in the same time last year, taking advantage of demand from owners of flex-fuel cars which run on both gasoline or ethanol. Ethanol's price advantage over gasoline remains significant. Rains early in August impacted field operations with mills crushing only 33.56 million tonnes, down 26.13 pct from same period last year. Ethanol production reached 1.98 billion liters in the first half of August, up 1.1 pct from same period last year, while sugar output came at 1.7 million tonnes, down 45.9 percent.
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