Opinion Focus
UNICA released today the update for the 1st half of October. The data indicate a greater direction of the mills towards ethanol production, in response to the drop in sugar prices. Even so, total production remains in line with projections, supported by the higher volume of sugarcane crushing and the recovery of the ATR.
1st Fortnight of October: Mills Reacting to the Drop in Sugar Prices.
UNICA (Sugarcane and Bioenergy Industry Union) released today the harvest figures for the first half of October. The data draw special attention to the percentage of the sugar mix. The variation of 3 percentage points in relation to the previous fortnight, now reaching 48.24%, reflects the reaction of the mills to the drop in the prices of sugar No. 11, which reached the lowest level in the last five years.
In the latest updates, it was already possible to observe a gradual reduction in the value of the sugar mix, driven mainly by the mills in Mato Grosso do Sul, Goiás and part of Minas Gerais, where the distance from the ports made ethanol a more attractive alternative.
However, with the constant drop in international prices, mills in São Paulo and Paraná also started to direct production to a more alcoholic mix, intensifying the downward movement. Between the last two weeks, the mix of the state of São Paulo fell 3 percentage points, from 58.67% to 55.30%.
Due to the sharper than expected reduction in the mix, we have lowered the projection of total sugar production in CS Brasil by 200 thousand tonnes. The new estimate is 40.2 million tonnes – maintaining the expectation that a production above 40 million tonnes is still achievable.
To learn more about the parity levels between sugar and ethanol in CS Brazil and stay up to date daily, access our dynamic dashboard on CZapp.
