NEW YORK, June 11 (Reuters) -Sugar market players will be keen to check for signs that 2024/25 sugar production may be less than expected when industry group UNICA releases its report this week.
UNICA was to release production data for the second half of May in coming days. Among the data is the so-called "sugar mix": the average cane allocation split for production of sugar and ethanol.
"The second half of May is being approached with caution by most market analysts, following the first half of May sugar mix, which performed below expectations and raised some concerns," said Bianca Guimaraes, a sugar analyst with S&P Global Commodity Insights.
The latest UNICA report brought a sugar mix of 48.27%, while a S&P survey of analysts expected 51.73% (see table).
If the mix remains below expectations, Brazil will produce less sugar in the full crop than expected. The market consensus for the Centre-South crop is around 42.5 million tons, which would equals the record production in 2023/24.
Some mills that are distant from ports might have allocated more cane to ethanol production recently, to generate quick cash to finance the harvest, said the head of a large sugar company in Brazil, adding this might partly explain the smaller mix in early May.
Others think the unexpected mix was a one-off thing and still believe the crop will develop as expected.
"We keep our estimate of a 5% increase in the sugar mix for the season," said Willian Orzari Hernandes, a partner at FG/A, a consultancy advising sugar mills in Brazil.
Most analysts expect an increase in the sugar mix because of investments that have been made by mills in the last two years - which are still ongoing - to increase their capacity to produce sugar.
BRAZIL CENTRE-SOUTH - 2ND HALF MAY S&P SURVEY
2023/24 | 2024/25 SURVEY | % CHANGE | |
CANE CRUSH | 46.77 | 46.64 | -0.30 |
SUGAR OUTPUT | 2.92 | 2.90 | -0.80 |
ETHANOL OUTPUT | 2.12 | 2.10 | -0.70 |
CANE TO SUGAR | 48.65% | 49.83% |
