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Brazil’s sugar output soars
August 14, 2017
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SAO PAULO: Brazil has produced record amount of sugar in the second half of July. The country’s centre-south region produced 3.41 million tonnes of sugar in the second half of July, the most for a 15-day period, as very dry weather allowed mills to work round the clock in the world’s largest cane belt.

Sugar production in the period surpassed the previous record in the second half of August 2012, according to cane industry group Unica. Mills crushed 50.73 million tonnes of cane in the second half of July, also an all-time high for a two-week period, Unica said.

The numbers, despite the records, were in line with market expectations, including the production mix that remains very heavy on sugar compared to ethanol. Mills allocated 50.33 per cent of the cane to sugar production in the second half of July, versus 48.05 per cent a year earlier. That sugar mix is one of the highest on record. In the last 10 years, for example, mills have never earmarked more than 50 per cent of the cane to sugar production considering the whole crop.

The extremely dry weather, despite the processing boost, is starting to worry some mills, Unica said.

“This weather should reduce agricultural yields for the areas that are going to be harvested later in the crop year,” the industry group said.

Agricultural research think-tank Cepea/Esalq, from the University of Sao Paulo, said this week that some producers were already expecting an early end to the harvest and a larger inter-crop period.

An overhaul of Brazil’s biofuels policy in coming days, aimed at cutting the country’s carbon emissions, should boost demand for cleaner fuels, stabilize the volatile industry and accelerate a recent wave of mergers and acquisitions in the sector.

The new federal programme, called RenovaBio, will give fuel distributors targets to cut emissions, which will force them to gradually increase biofuels volumes, according to policymakers, executives and analysts following discussions of the new law.

President Michel Temer will soon announce the programme via presidential decree, the Agriculture Ministry said this week, and the law could go into effect next year as soon as new regulations are established.

RenovaBio could be a lifeline to Brazilian ethanol producers who have struggled in recent years to compete with cheap gasoline. It could also bolster sugar prices by encouraging mills to produce more ethanol and less sweetener.

“Our company sees this program very positively,” said Rui Chammas, chief executive of Biosev, the Brazilian sugar and ethanol unit of commodities trader Louis Dreyfus. “It could mark a relevant change in how ethanol is valued, recognizing positive aspects such as the low carbon footprint,” he said.

Reuters

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