According to data released by Brazil’s sugar industry group UNICA, sugar production in the country’s center-south (CS) region rose 30% in the first half of April compared to the same period a year ago, reaching 710,000 metric tons.
This amount was higher than the market expected, with a survey by S&P Global Commodity Insights forecasting production at 689,000 tons. The increase in sugar production was attributed to more mills being operational during the period compared to last year, as well as a higher allocation of sugarcane to sugar production versus ethanol.
Specifically, mills used 43% of the sugarcane to make sugar, up from 38% at the same time last year. This rate typically increases as the crop progresses through the season.
Overall, sugarcane crushing totaled 15.81 million tons in the first half of April, up 14.1% from a year earlier and in line with market expectations. Total ethanol output also rose 7.2% to 841 million liters.
The higher-than-expected sugar production was seen as negative by the market, with sugar prices in New York falling to session lows after the report was released. As one U.S. sugar trader commented, “The market took the higher mix as negative.”
The data highlights the continued strong performance of Brazil’s sugar sector, which is a major global producer and exporter of the commodity. The increased allocation of sugarcane to sugar production over ethanol could signal shifting dynamics in the country’s biofuels market as well.