Brazil's sugar and ethanol industry expects another record sugar cane crop this year in the main center-south region, as well as continued firm prices due to strong demand. Analysts, brokers and producers forecast cane output of between 350 million and 362 million tonnes in 2005, up between 7 percent and 10.5 percent on last year, depending on weather leading up to the start of the harvest in March/April.
"If February and March are dry, the harvest will be close to 350 million tonnes. If the weather is excellent, the crop will be at the top end of the range," Luiz Carlos Correa Carvalho, director of Canaplan consultancy, said on Monday.
Carvalho said demand was expected to remain strong this year, especially for Brazilian ethanol after exports tripled last year.
"Producers used to have to seek buyers to take increased output. But the situation changed in 2004, and buyers are now chasing expanding supplies," Carvalho said.
He said the entry into force of a European Union directive to mix 2 percent biofuel in diesel will stimulate demand for ethanol. Domestic demand was also expected to grow.
Demand for sugar was also seen expanding, mainly in India.
In its initial 2005/06 (May/April) cane crop estimate, broker Hencorp Commcor put center-south cane output at 351.67 million tonnes. It estimated that 53 percent of the cane will be crushed into ethanol, up from 51 percent last year.
Julio Maria Borges, director of Job Economia consultancy, said that, given an expansion in the planted area, it was reasonable to expect an increase of 35 million tonnes in cane output to about 362 million tonnes.
"Everything points to an excellent harvest, though a lot depends on rain during the first quarter," he said, adding that cane crushing will be mainly destined for ethanol initially.
Weather conditions in the center-south support market expectations of an excellent harvest.
"Cane needs a lot of light and water, and this is what it's been getting - abundant rain interspersed with sunny periods," said the director of two mills in Sao Paulo state, which accounts for about two-thirds of Brazilian cane production.
Forecasts for 2005 include cane that was left standing in the fields in December, when it became too wet to continue harvesting.
The Sao Paulo Cane Agroindustry Union estimates that between 5 million and 6 million tonnes of cane was left uncut and could now be gathered in March in an early start to the next harvest.
Unica, which represents 85 percent of Brazilian cane output, is expected to issue its first forecast for the new cane crop in March.