Bumper Brazil Sugar Haul Damped by Forecasts of Rainy Dry Season
(Bloomberg) -- Some weather models are indicating wetter-than-usual conditions in Brazil’s Center-South sugarcane areas in the first months of the upcoming season. That would favor ethanol over sweetener production.
Warmer Pacific Ocean water may allow more rain to advance from southern Brazil to the country’s central region during the dry period that starts in May, Celso Oliveira, a meteorologist at Somar Meteorologia, said by telephone.
“Our models are starting to indicate more rains between May and June,” Ludmila Camparotto, meteorologist at Rural Clima in Valinhos, said by telephone. For May, slightly higher-than-average precipitation is expected in Sao Paulo’s center and south and Mato Grosso do Sul state, she said.
While it would benefit cane growth that was hit by drought in December and January, it would probably lower sucrose levels and therefore yields, Luiz de Carvalho, director of consulting firm Canaplan, said by telephone from Sao Paulo. "When it’s rainy, the plant converts sucrose into glucose and fructose, which are more convertible to ethanol,” Carvalho said.
Still, a wetter dry season isn’t consensus. If El Nino persists past June, central Brazil -- including Goias and Minas Gerais -- will probably continue to be warm and dry, said Ryan Truchelut, president of Weather Tiger LLC in Tallahassee, Florida. "Basically everything on the East Coast north of Sao Paulo,’’ he said.
"At this time, we expect the heaviest rains to stay concentrated in the south of Brazil as El Nino lingers for the next few months,” Kyle Tapley, an agriculture meteorologist at Radiant Solutions in Gaithersburg, Maryland said by email. “We still expect rain in the Center-South, but we are not expecting above normal rainfall.”
If mid-year conditions do prove wetter, mills would be hard pressed to increase sugar output by 3 million or 4 million metric tons, as recent estimates have indicated, Canaplan’s Carvalho said.
With India, Thailand and Europe cutting their sugar output this year, Brazil will once again drive global prices, he said. "While we see international sugar prices increasing even if Brazil increases its production, the outlook would be more bullish if the crop get rainier."
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