Biosev, the Brazilian sugar and ethanol arm of French commodities trader Louis Dreyfus, sees potential for center-south mills to have a production mix next season (2016/17) heavier on sugar, since the sweetener is paying a premium over ethanol, Chief Executive Rui Chammas said on Wednesday.
But the possible change in the production mix would not be enough to change the scenario of a global deficit expected for the sugar market in 2016/17, he said during a conference call with analysts.
“When we consider the new crop (2016/17), we see that there is a potential for it to be heavier on sugar (production),” said the head of Biosev, the world’s second largest cane processor with an estimated crush this year of up to 32 million tonnes.
According to cane industry group Unica, mills were allocating 58.2 percent of cane to ethanol production on average by the end of October, a result of higher returns for the biofuel earlier in the year and the need from some companies to generate quick cash through the very liquid local fuels market.
When asked by an analyst if mills could allocate as much as 60 percent of the cane next year to sugar production, Chammas said it was not likely.
“I don’t think the industry today has the flexibility to go up to 60 percent of the mix in favor of sugar,” he said.
Brazil, the world’s largest sugar producer and exporter, is about to finalize processing of the 2015/16 cane crop which most consultants put at close to 600 million tonnes.
Processing was delayed by above-average rains, so mills will continue operations well into December, a period they would traditionally use to work on maintenance.
Despite affecting processing, the rains improved prospects for next year’s crop. Independent consultancy Agroconsult projected last week that the next cycle would produce between 615 million and 630 million tonnes of cane in Brazil’s major center-south belt