Brazil anticipates record sugarcane harvest as ethanol production forecast jumps

In Brazil, according to Conab, Brazil is expecting a record sugarcane harvest of 629 million tons for this year, with an expected ethanol production of 2.78 billion gallons, according to reports from the national government.

The reports countered previous speculation in July that heavy rains would cause a slowdown in Brazilian sugarcane output. The speculation pushed shares in Cosan, the world’s biggest sugarcane processor, to their highest point since last September.  According to UNICA, sugar-cane output in the country’s Center South production region fell to 33.5 million metric tons as of July 16th, down from 35.1 million a year earlier.

Overall, sugar prices were up 54 percent by July on fears of an Indian sugar crop failure, and prices may hit as high as 25 cents a pound, a high since the early 1980s. The increase in prices and slowdown in production will force ethanol producers to trim output, which was down 14 percent compared to this period in 2008.

Recently, the International Sugar Organization is offering guidance of a potentially large sugar crop in Brazil next year, in response to soaring sugar prices, which have soared 85 percent this year following failure of the Indian sugar crop. The current harvest is in the 600 million ton range and the ISO said that as much as 35 million tons in extra production could be expected due to rising prices.

Approximately 44 percent of the Brazilian sugarcane harvest was processed into sugar this year, with the remainder processed into ethanol, but the ISO is saying that the ratio could be 50.50 next year and cause ethanol exports to drop to 1.05 billion gallons, from 1.24 billion this year.

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