On Thursday (21), the StoneX Market Intelligence updated its crop estimates for the 2023/24 and 2024/25 (Apr-Mar) cycles in the Brazilian Center-South. For the current 2023/24 crop, which ends in March/24, the surprising behavior in the final tail led to a revision in line with greater availability of cane in what has been recognized as an unprecedented super harvest in the industry's history.
By the end of February/24, the crop had already accumulated a total of 647.15 million tonnes, up 19.1% year-on-year. The combination of rainy weather during the second half of 2022 and investments in the sector for the current crop has led to a projected TCH of 87.3 t/ha. With regard to area, estimates indicate growth of 0.9% over the previous crop, totaling 7.55 million ha, resulting in a crushing of 659.3 million tonnes for 2023/24 - an increase of 20.2% year-on-year and 6.8% above the last record of 617.7 MMT registered in 2015/16.
Crushing (MMT) and TCH (t/ha) in the Center-South
Considering an average TRS estimated at 139.2 kg/t (-1.1% compared to 2022/23) and a production mix estimated at 49% for sugar in this crop, 42.8 MMT of sugar should be produced by the end of the season, up 27% year-on-year, which has brought exports and stocks to their all-time highs. As for ethanol, 2023/24 should end with production of 33.7 million m³, an increase of 16.4% compared to last season, driven by a 12.2% increase in sugarcane ethanol production (benefiting from higher crushing despite the more sugar-intensive mix) and a 39.9% increase in corn ethanol production - which should end the season at 6.2 million m³.
As for 2024/25, weather factors have led to a reduced expectation for the result of the season - which has already been priced in by the market, limiting the downward power of higher-than-expected production in the Thai and Indian crops during 2023/24 (Oct-Sept). Since November/23, rainfall in the cane-growing regions of the Center-South has consistently been below historical averages, accumulating a volume that was 27.4% below the 10-year average by the end of February/23, a crucial period for the development of cane fields.
Rainfall in the Center-South weighted by sugarcane regions (mm)
Source: NOAA. Design: StoneX.
Given the development of the weather scenario - influenced by El Niño and warmer months, with inconsistent rainfall in the second half of 2023 - the TCH, the crop's productivity variable, has been adjusted to 79.2 t/ha for 2024/25, an estimated drop of 9.3% compared to the current cycle, but still above the average of the last five crops, of 76.5 t/ha. In terms of area, the expectation for 2024/25 is a 0.7% increase to 7.61 million ha, as a result of the favorable scenario for increased investment in the sector as well as the inheritance of areas left over from the voluminous 2023/24 cycle. As a result, crushing is expected to reach 602.2 million tonnes of sugarcane in 2024/25, down 8.7% on 2023/24, but still 2.8% above the average of the last five crops.
As for sugarcane products, the new cycle is expected to further maximize sugar production, reaching a sugar-directed mix of 52%, as a result of the continued higher return from the sweetener and the greater maturity of investments in production capacity. With this, amid an average TRS of 141.9 kg/t (+1.1%), the outlook is for the 2024/25 cycle to see production of 42.3 MMT, just 1.2% lower than in the record 2023/24 crop.
Sugar production (MMT) and sugar-directed mix (%)
*Estimate: StoneX. Source: UNICA. Design: StoneX .
Due to a more sugar-intensive mix and a drop in crushing, the outlook is for sugarcane ethanol to fall by 12.3%, partially offset by an increase of almost 40% in corn ethanol production - which is benefiting from the inauguration of new plants due to come on stream in the 2024/25 crop. As a result, ethanol production is expected to stand at 32.1 million m³, down 4.7%.
Center-South crop estimates 
*Estimate: StoneX. Source: UNICA. Design: StoneX.
Daily recap
On Thursday (21), sugar prices reacted upwards on the main trading exchanges. Raw SBK4 closed the trading session at US¢22.06/lb (+1.33%). White SWK4 closed the day at US$ 640/t (+1.78%). The market continues to reflect concerns about drier weather in the Brazilian Center-South, also taking advantage of the more favorable macroeconomic scenario after the optimistic sentiment coming from the last meeting of the US monetary authority - which signaled the continuation of the prospect of cuts in the US interest rate throughout 2024.
