Sugar and Ethanol Daily Report

By: StoneX Intelligence Brazil, StoneX Intelligence Brazil

Mon, 11 Apr 2022, 21:45

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Conadesuca raises estimate for Mexican sugar production in 2021/22

Filipi Cardoso

filipi.cardoso@stonex.com

Arthur Machado

arthur.machado@stonex.com

Marcelo Di Bonifácio

marcelo.bonifacio@stonex.com

Increased agricultural productivity and agroindustrial yield partially offset lower harvested area

Last week, Conadesuca released new data regarding the progress of the sugarcane crop in the country, together with updated foreign trade data. According to the agency, 29 plants of 49 in total reported delayed crushing, so the works should extend until the last week of June in some locations.

In the 2021/22 crop (Oct-Sept) until the week ended April 02, 40.06 million tonnes of cane were processed in Mexico, a volume practically in line with that observed in the same period last year (-0.2%). Considering the reported agroindustrial yield of 8.25 tonnes of sugar per hectare, on average, the country’s sugar production reached 4.47 million tonnes (+1.2% YoY).

Despite smaller harvested area of 542,100 hectares in 2021/22 against 572,900 in the same period last year, agricultural productivity has offset the gap between the current year and the previous one. In fact, yields are 3.9 tonnes/hectare higher than in the same period last year, reaching 73.9 t/ha.

According to data provided by Conadesuca for April 2022, Mexican units’ processing is expected to exceed 54.6 million tonnes of sugarcane in the current cycle. If that happens, Mexico should produce around 6.17 million tonnes of sugar, with agroindustrial yield being close to 7.67 t/ha.

Sugar production in Mexico (million tonnes)

*Estimated. Sources: StoneX and Conadesuca. Design: StoneX.

StoneX’s weather monitoring for the next 14 days forecasts milder rainfall in the states of Veracruz and Jalisco (between 0 and 15 mm), two of the country’s main sugarcane areas, while San Luiz Potosi should receive heavier rains (from 15 to 40 mm), which may make fieldwork difficult in some of the fields.

In terms of exports, Conadesuca points out that 1.03 million tonnes of sugar had already been exported until April 03, which corresponds to 42.3% of the estimate volume for the current cycle: a total of 2.43 million. To the United States alone, considering that it imports much of its domestic sugar from Mexico, 509,100 tonnes have been directed since October 2021, an annual growth of 2.2%.

The new US Department of Agriculture (USDA) S&D report revised negatively the estimate for sugar production in the US by 0.7%, which is estimated at 8.8 million tonnes in 2021/22. This adjustment was based on the lower than expected production rate for some regions. Imports, in turn, were adjusted positively, albeit slightly, from 2.89 to 2.91 million tonnes of sugar. For Mexico, the USDA kept its import estimate at 1.0 million tonnes.

Based on this, the expected stocks/use ratio for the country was also revised to 12.5%, which was 1.1 percentage points below the March 2022 report, in addition to representing an annual drop of 1.3 percentage points, pointing to a less comfortable US sugar S&D balance.

On Monday, the sugar #11 nearby contract closed the session on the ICE/NY at 20.31 c/lb, down 0.5% in the day. Similarly, white sugar’s May/22 finished the day at USD 559.30/t (-0.2%). Overall, the movement was influenced by the price drop observed in the energy sector, as the market evaluates the falling Chinese demand.

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