On Thursday (15), the Brazilian Sugarcane and Bioenergy Industry Association (UNICA) released its biweekly crop monitoring report for the second half of January/24, an off-season period, but one that even with limited sugarcane crushing continues to surpass annual comparisons and add to the already record processing figure for the 2023/24 season (Apr-Mar).
During the second half of January, the Center-South processed a total of 714,010 tonnes of sugarcane, which is more than double the figure for the same period in 2023 (307,300 tonnes). Considering the accumulated crop, 646.05 million tonnes of cane have already been crushed, 18.95% more than in the same period of the previous crop.
Accumulated sugarcane crushing in the Center-South (million tonnes)
In light of the record crushing this season, with an accumulated sugar-directed mix of 49.04%, sugar production in the Center-South by the end of January had already accumulated 42.12 million tonnes - an increase of 25.52% compared to last season, which took sugar stocks to all-time highs in this cycle - reaching more than 16 MMT by the end of November/23. The production figure for 2023/24 already represents growth of 9.5% compared to the close of the last record crop (2020/21), and should continue to grow due to the early harvest of the 2024/25 season (Apr-Mar) by some production units during March/24. In this sense, it is worth noting that StoneX expects around 1 million tonnes of sugar to still be produced by the Center-South by the end of this crop, ending the season with a production of 43.1 million tonnes, an increase of 12% compared to the record crop of 2021/22.
With the 2023/24 crop (Apr-Mar) heading towards the end, indicating low numbers for sugarcane products, attention has turned to the results of the mills' biweekly ethanol sales, which, as expected, indicated strong growth in the period.
On the production side, the second half of January marked a big increase in the share of sugarcane production going to ethanol (64.98%), which reflects the improvement in biofuels business during the 2023/24 inter-crop period, especially hydrous ethanol.
According to a UNICA survey, during the second half of January/24, 1.52 million m³ of ethanol were sold by mills in the Center-South, an increase of 38.9% year-on-year. Separating by anhydrous and hydrous, there was an increase of 1.34% and 75.54%, respectively, reaching 0.55 and 0.97 million m³.
Two-week sales of hydrous ethanol in the Center-South (million m³)
Source: UNICA. Design: StoneX.
The large growth in hydrous ethanol sales is explained by an increase in the ICMS on gasoline in February, which added BRL 0.15/liter to the price of fuel, leading to an acceleration in ethanol sales. Also contributing to the improved sales performance of the biofuel since October 2020 is the largely favorable parity in most of the country, especially in the state of São Paulo, where the weekly average parity between ethanol and gasoline was near 60%, close to the level established since September 2023.
Daily recap
On Thursday (15), raw and white sugar prices fell on their main trading exchanges. For raw #11, the daily decline was 2.2% for the most active contract SBK24, which closed the trading session at US¢22.24/lb. For white #5, the most active contract SWK24 closed the trading session at US$630.6/t (-2.71%). In this context, the return of the rains in a large part of the Brazilian Center-South continues to explain part of the bearish tone of the market this week. On the macroeconomic front, which influences the actions of speculators in the futures market, the highlight for Thursday is the release of job creation data in the United States for January/24, which keeps expectations of an interest rate cut in the largest global economy more distant.
