December 3, 2014

Australia-based Green Pool is estimating a global sugar deficit of 4.58 million tons for the 2015/16 season based on expectations that Brazilian output will fall to 30.7 million tons. This would be the first deficit in six years, and even though Brazil’s Center South region, which is responsible for 90% of the country’s output, will see cane volumes rise by 10 million tons to 568 million tons, ethanol is expected to take a greater share of the harvest. Rabobank concurs, stating that the ethanol industry will take 57% of the Center South cane after the Brazilian government has just passed a law mandating the increased blend of ethanol to gasoline from 25% to 27.5%. In contrast to its forecast for 2015/16, Green Pool increased its estimate for Center South sugar production for the current season by 700,000 tons to 32 million tons, and predicted a 6 million ton increase for the region’s cane harvest at 558 million tons. The harvest in the Center South has been forecast to end abruptly because of drought, however these views appear to have been overstated, as the harvest continues, and crushing is currently down by only 4.9% against expectations to 18.7 million tons.

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