Kingsman Cuts Brazil’s Cane Output, Keeps Sugar Forecast

The sugar cane crop in top producer Brazil’s main growing region will be 510 million metric tons this season, or 1.9 percent lower than a previous forecast, due to dry weather, Kingsman SA said.

That compares with a previous forecast of 520 million tons for the 2012-13 season starting this month, the Lausanne, Switzerland-based broker and researcher said in a report e- mailed today. Sugar output was kept at 32.8 million tons as millers will direct more of the raw material to the sweetener at the expense of ethanol, the report showed. The biofuel and sugar are both made from cane in the South American country.

The lack of rains in the region last month and in February “affected the same cane growing regions that had been touched by drought between August and September 2011, thus aggravating its impact on cane development,” Kingsman said in the report. “As a consequence, cane buds are thinner and smaller than average, which will affect productivity in the center south.”

Sugar cane production in the area in the 2011-12 season dropped to 493.3 million tons after dry weather, frost and flowering damaged the crop, according to industry group Unica. That was the first decline in a decade, the data show. Sugar output was 31.3 million tons in the period, Unica said on April 12.

Millers in the region will direct 48.6 percent of all the cane harvested to sugar output, up from a previous estimate of 48 percent, Kingsman estimates. The remainder will be used for ethanol production, which is set to total 21.4 billion liters (5.65 billion gallons), the broker said. That’s down from a previous forecast of 21.9 billion liters, according to the report.

“The decrease in our cane estimate is made at the expense of ethanol,” the broker said. “The large majority of the latest new mills are devoted to sugar production. Together with the recent investments on crystallization capacity, the potential for a larger sugar mix has increased over recent years.”

To contact the reporter on this story: Isis Almeida in London at Ialmeida3@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at Ccarpenter2@bloomberg.net.

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