On Tuesday (13), the Brazilian Sugarcane and Bioenergy Industry Association (UNICA) released its biweekly crop monitoring report for the second half of July/24. The association of the sugar-ethanol sector indicated a crushing of 51.3 million tonnes of sugarcane, a decrease of only 3.4% in relation to the same period of the previous crop - which had registered the sector's biweekly crushing record.
Considering the accumulated value since the beginning of the 2024/25 crop (Apr-Mar), the current season already totals 332.84 million tonnes of cane - still 6.6% higher than the 2023/24 crop. For 2024/25, StoneX's projections point to a finish closer to 602 MMt.
Two-week sugarcane crushing in the Center-South (million tonnes)
Source: UNICA. Design: StoneX.
As highlighted in previous reports, the current crop has experienced a higher crushing rate than the record 2023/24 season due to drier weather in the initial months of harvest. Comparing the volume of rainfall weighted by sugarcane regions, from April to July, the current season received 26.4% less rainfall than 2023/24, and 25.7% less than the average of the last 10 years. As a result, with little hindrance from the weather, harvesting activities progressed more quickly at the start of the current crop.
The drier weather at the end of 2023 and beginning of 2024, however, is already having an impact on the productivity of the current season. According to preliminary data from the Sugarcane Technology Center (CTC), average productivity in the Center-South during the month of July stood at 87.5 t/ha - down 10.5% compared to July/23. Since the beginning of the crop, the reduction in productivity has been 5%.
As a result, the effect of the weather on productivity has become clearer over the course of the crop. According to UNICA, in the state of São Paulo, the drop in productivity was more than 15% in July. On the other hand, the second half of July also revealed an improvement in the feedstock's quality, which rose from 143.3 kg/t to 146.86 kg/t. Compared to the same period in the previous crop year, the increase is 1.93%, and the accumulated increase since the start of the season is 0.14%.
As for the sugar-directed mix, it stood at 50.28% during the two-week period, down from 50.63% in the previous crop, due to the large increase in demand for hydrous ethanol. In light of this data, sugar production stood at 3.61 MMt in the period, down just 2.16% from the record two -week period of 2023/24 and 10.5% above the three-year average.
Two-week sugar production in the Center-South (million tonnes)
Source: UNICA. Design: StoneX.
Regarding ethanol, the high numbers of hydrous ethanol sales at the pumps continue to drive growth in production. In this context, the second half of July/24 recorded production of 1.6 million m³ of hydrous ethanol (+8.3% y/y) and 0.94 million m³ of anhydrous (-3.7% y/y), totaling an increase of 18.5% in total ethanol production.
Ethanol production in the Center-South (million m³)
Source: UNICA. Design: StoneX.
Considering the scenario for mill sales, following the trend of the previous two weeks, the second half of July showed a strong increase in demand for hydrous ethanol. During the period, hydrous outflows from mills to the domestic market stood at 935,000 m³ (+42.4% y/y), while anhydrous outflows stood at 480,000 m³ (-1.2% y/y).
Despite a slight drop in the share of hydrous during the month of June/24, the figures for July continue to indicate a high level of hydrous sales by the mills, reflecting the context of strong demand for hydrous seen since the beginning of 2024. Despite having increased in a number of states, the parity between ethanol and gasoline continues to favor the biofuel, indicating that production and demand should remain high throughout the crop.
Daily recap
On Tuesday's trading session (13), the October/24 NY#11 contract ended the day up 0.55%, at US¢18.39/lb. For the SWV4 white contract, the day ended at US$ 523.1/t (+0.71%). The movement comes despite the release of UNICA's monitoring report, which indicated sugar crushing and production above market expectations. Sugar production for the two-week period was 10% above the three-year average and only 2.16% below the record production of 23/24. As a result, after reaching a daily high of US¢18.70/lb, SBV4 sugar retreated as the market absorbed the implications of the report and the forecast for the 2024/25 crop. Despite the high sugar production, the sugar-directed mix continued to be disappointing, falling short of the same period in 2023/24. In general, even with the large production of the 15-day period, the resilience of prices on Tuesday indicates that the market remains attentive to the movement of crop variables, particularly the sugar mix 'while also paying attention to productivity, which should begin to show the results of the drier weather from August/24 onwards.
