It is reported by S&P Global Platts.

In contrast to the severe dry weather that lowered sugarcane crushing in the 2021-22 CS crop that ended in April, the high volumes of rains in the main producing states in 2022 increased the total volume of cane but negatively affected crushing.

S&P Global Commodity Insights estimated that sugarcane crushing will increase for the second consecutive season to total 586 million tons in the 2023-24 crop, up 35.84 million tons from 2022-23 but still under the latest high of 605 million tons recorded with the 2020-21 crop.

«Assuming favorable weather until March, which is the most important cane growing period, cane agricultural yield is expected to increase to 78 tons/hectare in 2023-24, up 6.5% on the year, — said Luciana Torrezan, global manager of sugar analytics from S&P Global Commodity Insights. — Cane availability is expected to grow to 586 million mt, up 36 million mt on the year».

Considering the sugar mix, producers are expected to keep maximizing sugar production, in line with trends since 2020-21 as the national fuel price environment became cloudy and the Renovabio program did not guarantee enough predictability to encourage an increase in ethanol production. This same production pattern has been observed since the 2020-21 crop.

The wide price spread between the sugar export market and domestic hydrous ethanol is expected to fall if the reinstatement of the Pis and Cofins federal taxes occurs Jan. 1.

«Although the likely reinstatement of federal fuel taxes in January 2023 is a supportive factor for ethanol prices, CS Brazil mills are expected to maintain maximum sugar production in 2023-24, — Torrezan said. — Sugar prices are projected to remain more profitable than ethanol in CS Brazil, with Brent crude oil trading below $90/barrel and assuming Petrobras will track international gasoline parity».