According to Brazil’s government agency Conab, the country’s new sugarcane crop for the 2024/25 season (April-March) is projected to be only slightly smaller than the record previous one, despite an expected decline in agricultural yields.
Conab forecasts the total sugarcane crop to reach 685.86 million metric tons, which is 3.8% less than the 2023/24 season. The smaller overall crop is the result of a 7.6% decline in agricultural yields due to below-average rains and excessive heat. However, this drop is partly offset by a 4.1% increase in the planted area to 8.67 million hectares.
This area expansion surprised the market, as the USDA had projected a much smaller increase of only 1.3%. According to a U.S.-based sugar trader, “Conab surprised the market with that area increase. Others such as USDA see a much smaller expansion.”
Despite the slightly lower cane volume, sugar production in Brazil, the world’s largest producer and exporter, is projected to reach a record high of 46.29 million tons, up 1.3% from the previous cycle.
On the other hand, ethanol production, both sugar and corn-based, is expected to decline by 4% to 34.18 billion liters. The drop in sugar-based ethanol output is estimated at 8%, as mills allocate more cane to sugar production and less to ethanol. However, corn-based ethanol production is seen growing by 16%.
The Conab report led to a 3% drop in sugar prices on the New York market (SBc1) as it provided a more optimistic outlook for Brazil’s sugar production compared to previous industry estimates.
Overall, the resilience of Brazil’s sugarcane sector in the face of challenging weather conditions and the potential for a record sugar output highlight the country’s continued dominance in the global sugar market.