• As of this fortnight, CS Brazil has already crushed 40% of its cane and produced 13.3mmt of sugar in 20/21.
• At this point, a production change (i.e. sugar mix decrease) is unlikely as sugar prices still best ethanol’s.
• Hydrous ethanol sales continue to gradually recover.

Summary Table 2H June

40% Done

• Despite heavy rains at the end of the fortnight, 2H June crush totalled almost 43mmt.
• This takes cumulative crush up to 229mmt, or 40% of the 2020/21 season.

Cumul. Cane Crush: 2H June vs. Total of the season – 40% of cane processed so far

• So far no surprises regarding the production mix: mills are maximizing sugar output.
• We expect this behaviour to continue as long as the ethanol market does not incentivize washouts. 
• The present combination of No.11, FX and hydrous prices does not incentivize buybacks that would allow millers to shift their production mix to ethanol
• And with the current outlook for hydrous prices , it might be too late in the season for this to occur.

Fortnightly Sugar Mix – no surprises as CS continues to max sugar mix

Ethanol Market

• Hydrous sales by the mills totalled 1.47bi litres in June.
• Despite being 20% below yoy, it is still showing a gradual recovery after the demand valley registered in April.
• Fuel demand in Brazil is recovering as social distance measures are eased and this is expected to be reflected in ethanol sales data in the upcoming months.
• However, hydrous price parity at the gas stations has already surpassed 65%, which might limit the upside in sales figures from now on.

Fortnightly Hydrous Sales – slow and steady ethanol recovery