Record Brazilian Sugarcane Harvest, Datagro Predicts

Sugarcane mills in the centre-south of Brazil are forecast to cut the ethanol mix in cane to 57.2 percent in 2009/10 from 60.37 percent in 2008/09 due to high sugar prices, the head of the Datagro consultancy said. Plinio Nastari on Tuesday estimated the sugar equivalent cost of hydrous ethanol at 10.6 cents per lb FOB, well below the present 15-16 cents per lb cost of raw sugar. The sugarcane crush in the main centre-south growing region of Brazil is forecast at a record 535-540 million tonnes in 2009/10, up from 504 million tonnes in 2008/09, he told told Reuters in an interview at the F.O. Licht World Sugar conference.

Nastari said that mills in the main centre-south growing region of Brazil were expected to produce 31.1 million tonnes of sugar in 2009/10, just below full capacity of 32 million tonnes, because of the strong price of sugar. The whole of Brazil is expected to produce 35.9 million tonnes of sugar in 2009/10.

“It is better to produce sugar than ethanol, but the limit is the capacity to produce sugar,” Nastari, a keynote speaker at the conference, said. He said he expected ethanol prices to rise eventually, converging towards the sugar price, as mills would hold back ethanol stocks, but sugar was likely to retain a premium of 2.0-2.5 cents per lb over ethanol.

Brazil is the world’s biggest producer and exporter of sugar and has a highly developed fuel ethanol industry derived from cane. The two-day F.O. Licht World Sugar Conference concludes on Wednesday.