Brazil's 2018/19 center-south sugar output is projected to fall to 28 million tonnes compared with a previous estimate of 31 million tonnes due to a drought and high ethanol production, consultancy Safras & Mercado said on Wednesday.
Safras' estimate compares with sugar production of 36.4 million tonnes reported in 2017/18. The consultancy expects a total cane crush of 580 million tonnes versus 595 million tonnes last season. Ethanol output is seen at 27 billion liters compared with 25.35 billion liters in 2017/18.
Most of Brazil's central areas have received below-average rains this year. According to Thomson Reuters Agriculture Weather Dashboard, the Ribeirao Preto region in the heart of Brazil's main cane belt received 23 millimeters (0.91 inch) of rain in the last 90 days compared with 65 millimeters (2.56 inches) for the period historically.
Safras' sugar and ethanol analyst Mauracio Muruci said the drought will have a negative impact on cane fields expected to be harvested later in the crop, reducing the amount of sucrose to be extracted this year. Muruci also said that high gasoline prices in Brazil will continue to boost production of ethanol in the mills, reducing the amount of cane they tend to earmark for sugar production.
Safras estimates that mills are currently allocating 62 percent of cane to ethanol production and only 38 percent to sugar making. Brazil's sharp sugar production to fall this year has not sustained global prices due to production increases in regions such as Thailand, India and Europe keeping prices hovering around multi-year lows.