Brazil's 2018/19 center-south cane crop is expected to fall to 580 million tonnes from 588 million tonnes in the previous season due to a reduction in planted area and stagnant cane productivity, the Brazilian government said on Thursday.
In its first projection for the new cane crop, Conab, Brazil's agricultural statistics agency, said the world's largest sugar-producing region should make 32.8 million tonnes of the sweetener in 2018/19 versus 35.3 million tonnes previously, as mills earmark more cane for ethanol production. Conab said center-south mills are expected to make 26.36 billion liters of biofuel ethanol this season, versus 26 billion liters in 2017/18.
The report highlighted changes in Brazil's sugar sector caused by a depressed market. Cane planted area fell for the second year in a row in the country. Mills have abandoned land that is farther away from plants to cut transportation costs to cope with the lowest prices in over two years. Conab said Sao Paulo state alone reduced cane planted area by almost 120,000 hectares in the current season.
"That is a result of mills returning leased land to owners or finishing cane supply contracts with some of their providers," the report said. Brazil's total cane area is expected to fall 1.3 percent in 2018/19 from 2017/18 to 8.61 million hectares. According to the report, total Brazilian cane production including other regions such as the northeast should reach 625 million tonnes this season versus 633 million tonnes in the previous crop.
Total sugar production in the other areas was projected at 35.47 million tonnes from 37.86 million tonnes in the previous crop, while total ethanol output is seen at 28.15 billion liters versus 27.76 billion liters. Conab confirmed earlier reports from independent analysts that the tight financial situation in most mills is delaying field renovation and hurting cane productivity.
The agency said cane yields in the 2018/19 season are expected to remain at low levels from the previous two crops, at around 72.6 tonnes per hectare. "Ageing cane fields, low renovation rates and reduced crop care have kept yields below the 80 tonnes per hectare mark," Conab said.