SAO PAULO: Brazil's main center-south sugarcane output will fall to 575 million tonnes in the upcoming season from last year's 596 million due to poor weather, including drought and frost, leading sugar and ethanol analysts said on Monday.
As the world's largest sugar producer and exporter, futures prices of the commodity have come off of multi-year lows on concerns that bad weather in Brazil will erase what's left of the global sugar glut.
Analyst F.O. Licht said early on Monday that the center-south, the region that produces 90 percent of Brazil's cane, will likely yield 31.1 million tonnes of sugar, down from 34.3 million tonnes in the now-ending 2013/14 season.
Senior sugar analyst Stefan Uhlenbrock at F.O. Licht said at an annual industry event in Sao Paulo the region's ethanol production is seen at 25.35 billion liters in 2014/15, just slightly less than the 25.5 billion liters a year earlier as mills favor the biofuel amid low sugar production.
Uhlenbrock said drought in southeastern Brazil in January and February likely damaged 25 million tonnes of sugarcane, while frost last July had also hurt the region's aging plants.
The weaker cane crop in Brazil and mills' preference for ethanol will contribute to a reduction of world sugar production by 1 million to 2 million tonnes in 2014/15, potentially causing the market to return to deficit for the first time in five years.
Still, ample sugar stocks, particularly in Asia will mean prices remain low.
"Even a deficit would not mean a significant price recovery," Uhlenbrock said.
Thailand saw a record 2013/14 sugar production of 12.5 million tonnes in 2013/14 due to "picture perfect" weather, he said. India likely produced 23.9 million tonnes for that season, and Uhlenbrock said he expects production to recover next year.
Later on Monday at the Global Agribusiness Forum in Sao Paulo, Plinio Nastari, president of Datagro sugar and ethanol analyst firm, also put the new cane crop at 574.6 million tonnes, down from his previous estimate of 580 late last year.
Nastari estimated sugar output at 33.2 million tonnes in 2014/15, which has already started crushing in some areas, and forecast ethanol output at 23.6 billion liters.
After frost last year and drought in early 2014, Nastari said good weather late in the season is essential for the cane forecast to be maintained.
"We are watching and keyed into the weather, especially through the end of April," Nastari said after hosting the forum. "The rains of March and April are fundamental for the development of the crop that will be harvested in the second half of the year."
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