Broker Hedgepoint Global Markets reduced the estimate of sugar production in Brazil’s 2024/25 season by 300,000 metric tonnes to 41.3 million tonnes. It did this revision for two main reasons: first, lower-than-anticipated allocation of sugarcane to sugar production, and second, poorer cane quality, reported Reuters.
According to a note from Livia Coda, sugar analyst at Hedgepoint, mills are allocating less cane to sugar production than had been initially estimated. This is because the crop quality is not as high as last season’s, coupled with very fast harvesting.
Broker cuts forecast for amount of cane used to produce sugar to 50.3% of crop from 51.2%. Mills in Brazil can adjust the amount of cane used to make sugar or ethanol depending on prices for both. When sugar offers better financial returns, mills increase the amount of cane earmarked for sugar at the expense of ethanol production.
Initially, analysts and traders expected a record cane allocation to sugar this year, especially after several mills invested in plant upgrades to enhance sugar production capacity. However, data from industry group UNICA has shown that the increase in the sugar mix is less than anticipated.
“We had overestimated the sugar mix. It now seems reasonable to revise downward our projection,” said Coda. She noted that the crop is displaying lower sugar content than last year, a consequence of unfavourable weather conditions during the crop’s development.
Hedgepoint trimmed sugar production expectations but marginally increased its forecast of total sugarcane quantity to be crushed in the current season from 613 million tonnes to 620 million tonens, based on volumes of high crushing in the first months of the new season.
