Sugar and Ethanol Rise with Climate Uncertainty – Written by Professor Dr. Dr Marcos Fava Neves, Vinicius Campava and Beatrice Papa Casagrande
Reflections on September/October agricultural facts and figures and what to watch for in November
In sugarcane, the accumulated crushing in the 2024/25 season, up to 10/1, reached 505.1 million tons, a growth of 2.3% compared to the previous cycle (493.5 million tons). However, in the second half of September, crushing reached 38.8 million tons, a decrease of 13.6% compared to the same period of the last harvest (44.9 million tons), according to data from the Sugarcane and Bioenergy Industry Union (UNICA).
In the last half of September, 258 production units were put into operation in the central and southern region (there were 261 units in 2023), of which 239 were dedicated to sugarcane processing, 9 for ethanol production from corn and 10 flexible plants.
Raw material quality, measured by ATR (total recoverable sugars), reached 160.0 kg/t in the second half of September, registering an increase of 3.7% compared to the previous session (154.3 kg/t). In the cumulative harvest result, the ATR is 141.0 kg/t (+0.6%).
The cumulative production mix from April until January 10, 2010 was 48.85% for sugar (fall) and 51.15% for ethanol (rise). The same moves occurred in the latter half of September, with 47.79% allocated to sweeteners and 52.21% allocated to biofuels. These numbers reflect the great fluctuations and challenges facing the sector in light of the drought observed this year and the fires in recent months.
Concern has increased about the next season (2025/26) with the continued drought and fires affecting large areas of sugarcane. The outlook for the next harvest remains uncertain, especially with a 70% chance of a La Niña event, raising doubts about rainfall in the Central South, but a preliminary survey conducted by NovaCana indicated that estimates for the 2025/26 cycle vary between 581.0 million and 620.0 million. million tons.
In sugar, production in the second half of September reached 2.8 million tons, recording a decrease of 16.2% compared to the same period in the previous cycle (3.4 million tons). As for the cumulative yield, production reached 33.1 million tons, an increase of 1.5% compared to the previous cycle. Data is also from Unica.
In exports, Brazil was responsible for sending 3.9 million tons (+24.0%) of sugar abroad, equivalent to US$1.8 billion (+12.0%) in revenue. This scenario occurred despite a 9.7% drop in the average export price, mainly due to the large volume supplied by the country in the historic 2023/24 harvest (45.7 million tons). In the current 2024/25 cycle, a new record is expected to total around 46.0 million tons, according to data from Mapa’s Agrostat platform.
Global demand for raw sugar may be lower after the high volumes seen this year, according to a report by Czarnikov. The decline in the premium for white sugar and the decrease in waiting time for ships to load sugar in Brazilian ports indicate this weakness. In addition, refineries in the Middle East face increasing competition from the European Union, which has announced a bumper harvest. With global inventories declining, the challenge facing the future is the lack of flexibility in dealing with significant changes in demand.
For the first time, Vietnam led sugarcane productivity among ASEAN countries, surpassing Thailand, Indonesia and the Philippines. In the 2023/24 season, production reached 6.8 t/ha, driven by commercial measures and digitalization in mill management. As a result, sugarcane production increased by 166% and sugar production by 161%. Growth is expected to continue in 2024/25, with a focus on enhancing production, traceability and combating fraud, according to information from TV Brics.
The global sugar market is expected to face a deficit of about 2 million tons this season, due to adverse weather conditions affecting Brazil’s crop, according to Sucres et Denrées (Sucden). Raw sugar production in the central and southern region could decline by about 40% in the fourth quarter of 2024 and the first quarter of 2025, compared to the previous year. In the Northern Hemisphere, sugarcane and beet production performed well thanks to higher sugar prices and favorable weather in 2023, but these factors will not be enough to offset Brazilian losses. Moreover, the potential for India to increase its sugar exports and facilitate the global market is limited.
In New York, sugar prices are starting to rise again in light of an expected decrease in rainfall in the Mid-South, as well as the recent effects of droughts. At the end of our column, the March 25 contract price was quoted at 22.21 cents per pound; and May 25 at 20.51 cents per pound. In London, the price of white sugar was US$568.20 per tonne on December 24 and US$567.90 per tonne on March 24. In Brazil, the price of Cristal Branco São Paulo (Cepea/Esalq) reached R$ 155.30/piece (50 kg), a monthly increase of 6.2%.
In ethanol, production recorded 2.2 billion liters in the last 15 days of September, including 1.4 billion liters of hydrous ethanol (+3.3%) and 792.4 million liters of anhydrous ethanol (-4.9%). From the beginning of the harvest until October 1, cumulative production reached 25.2 billion liters (+7.4%), with a focus on brackish water reaching 16.1 billion liters (+16.4%), while anhydrous production showed a decrease of 5.5%, for a total of 9.1 billion litres. liter.
The amount of ethanol produced from corn reached 329.8 million liters in the second half of September, an increase of 38.3% compared to the same period of the previous harvest. In the accumulated yield, corn biofuel production reached 3.8 billion liters, an increase of approximately 27.0% in the year-on-year comparison.
In terms of sales, ethanol sold in September totaled 2.9 billion liters (+6.2%). Hydrous ethanol sales in the domestic market amounted to 1.7 billion liters (+4.3%), while anhydrous ethanol totaled 1.0 billion liters (+10.7%). Considering the accumulated harvest, total sales amounted to 17.8 billion liters (+16.2%), of which 11.6 billion liters were aqueous (+30.7%) and 6.2 billion liters were anhydrous (-3.6%). This scenario reinforces the hot pace of hydro-ethanol sales since the beginning of 2024, reflecting the competitiveness of biofuels at gas stations, which offered a parity of less than 73.0% of the value of gasoline in states such as São Paulo, Goiás and Mato Grosso. And Mato Grosso do Sul and Parana.
On the CBios market, as of 08/10, 32.3 million credits have been issued, of which 28.9 million are available for trading. This amount already represents more than 90.0% of the decarbonization target set for 2024.
UNICA and the Ministry of Foreign Affairs, with the support of the Brazilian Embassy in Japan, held a symposium in Tokyo to discuss decarbonization of the aviation sector, with a focus on Brazilian ethanol as a feedstock for sustainable aviation fuel (SAF). The symposium examined the potential of the Alcohol to Aircraft Route (ATJ) to reduce emissions in the aviation sector, and highlighted opportunities for cooperation between Brazil and Japan.
The National Bank for Economic and Social Development (BNDES) has approved financing worth R$500 million for the construction of corn ethanol plants. Coamo Agroindustrial Cooperativa will use the resources to build a plant with a capacity of 1.7 thousand tons of corn, which will produce 765.0 thousand liters of ethanol, 510.0 tons of distilled dry grains (DDGS) and 34.0 tons of corn oil per day. Alvorada Bioenergia will allocate the necessary financing to establish a plant with a production capacity of 222.0 million liters of ethanol per year, in addition to 147.0 thousand tons of DDG and 8 thousand tons of crude oil, which will contribute to reducing greenhouse gas emissions.
According to data from SCA Brasil, the price of hydrous ethanol, with taxes, in the municipality of Ribeirão Preto (SP) reached R$3,080/l on October 18, an increase of 13 cents per liter in the monthly comparison. Anhydrous was priced at R$2,990 per litre, one cent lower than the previous month’s price, indicating the latest incentive to consume water.
ATR Value: In September, Total Recoverable Sugar (ATR), issued by Consecana, ended the month with prices at R$1.1507/kg, a monthly decline of 2.0% or 2.3 cents lower. At the current harvest date, month-to-month prices were: April 24, R$1.1879/kg; May 24, R$1.1684/kg; June 24, R$1.1635; July 24, R$1.1759/kg; August 24, R$1.1730/kg; Now in September the price has dropped to R$1.1507 per kilogram. From a cumulative perspective, we reached R$1.1662/kg, which is a slight monthly decline. Until the end of the cycle, we believe prices will range between R$1.17 per kg and R$1.19 per kg, especially with the recent recovery trend in sugar and ethanol.
In conclusion, the five key facts to follow this November in the cane chain:
Climate forecast for the coming months in the central and southern region. At the present time, it is necessary for the distribution to be positive, with the aim of growing sugarcane for the 2025/26 season, especially in areas affected by the fires.
And in sugar, despite the recent rise due to climate concerns, some recent forecasts point to weak global demand in 2025. Let’s evaluate the scenario at our main competitors. Vietnam, for example, is expected to record the highest productivity among the countries of the continent in this cycle.
Monitor hydro-ethanol consumption with recent price increases. Gasoline remained stable at the national average (R$6.09/l), making ethanol consumption (R$4.02/l) beneficial in eight states and the Federal District, according to the National Police Agency’s analysis.
Instability in the Middle East continues to cause a great deal of uncertainty in the fuel market. In October, the price of a barrel of WTI fluctuated from $67.79 to $77.14, closing at $70.57 at the close of our column. In Brent, the variation was from US$71.09 per barrel to US$80.03 per barrel, closing at US$74.26 per barrel. Monitoring conflicts in the region on a daily basis is essential to assess the impacts on gasoline/ethanol prices and production costs.
Finally, monitoring the exchange rate, which is an essential element of pricing in the sector. Since the beginning of October, the dollar has accumulated increases, rising from R$5.42 on 01/10 to R$5.70 on 10/21, at the end of the column.
Marcos Fava Nieves is a full professor (part-time) at the University of the South Pacific School of Management (Ribeiṛo Preto РSP), at FGV (Ṣo Paulo РSP) and at the Harvin School of Agribusiness (Ribeiṛo Preto РSP). He specializes in strategic planning for agricultural businesses. Review texts and other materials on DoutorAgro.com and watch videos on Youtube (Marcos Fava Neves).
Vinicius Kambava is a Markestrat Group Fellow and Professor at Harven Agribusiness School, Ribeirão Preto – SP. Agricultural Engineer from FCAV/UNESP, MSc and PhD in Management from FEA-RP/USP. He specializes in strategic communications in agriculture.
Beatrice Papa Casagrande is a consultant at Markstrat Group, a student of the Master in Regulatory Management at FEA-RP/USP and a specialist in market intelligence for agribusiness. Dr. Agro
