South America Calling

Brazilian Sugarcane Output to Fall Next Year

Brazil's center-south will see sugarcane crushing decline by 6.8% next season due to low levels of crop replanting, according Plinio Nastari, president of Datagro, a leading local industry consultancy.

The 2014-15 harvest, which starts in March, will total 556 million metric tons (mmt), down from 612 mmt from the current harvest, which finishes in November.

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The decline in replanting across the center-south, which accounts for about 85% of production, is a result of dry weather, which created unfavorable soil conditions.

Low prices for sugar and ethanol were also a disincentive.

As a result, sugar output is seen dropping 3.7% to 32.9 mmt, while ethanol production is pegged to fall 6.7% to 24.0 billion liters.

Ethanol distillers have long complained government controls of gasoline prices inhibit their competitiveness. But even with local gas prices 15% below equivalent international crude levels, ethanol has gained market this year, said the consultant.

Hydrous ethanol consumption has risen 21% in 2014 and the percentage of flex-fuel cars using ethanol has risen to 35%. Indeed, ethanol is currently much more profitable the sugar and crushers will increase output of the biofuel this season, said Nastari.

(AG)

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