The latest forecast from the United States Department of Agriculture (USDA) in Brazil predicts a decline in Brazil's sugar cane processing for the 2024/25 season. Factors such as irregular rainfall patterns in the Central-Southern region contribute to an anticipated 8.5% decrease compared to the previous cycle. Despite challenges, investments in field renewal and increased productivity are expected to bolster production, albeit below a record projection.

Production Estimates

The USDA anticipates Brazil's sugar cane processing to reach 645 million tons during the 2024/25 season, a notable reduction from the previous cycle. In addition to climatic factors, the agency highlights investments in field renewal and enhanced productivity as contributing factors. However, the projected volume falls short of a "remarkable" record projection of 705.2 million tons due to various challenges.

Regional Insights

The Central-Southern region is expected to account for a significant portion of Brazil's sugar cane processing, with an estimated 600 million tons. This represents a 7.6% decrease compared to the previous season's harvest. Conversely, the Northern-Northeast region is forecasted to experience a 19.5% decline in production, with estimates reaching 45 million tons. Challenges in the region have led to a decrease in sugar production, emphasizing the need for strategic measures to address production constraints.

Plantation Area and Market Dynamics

The USDA estimates that the total cultivated area for sugar cane will increase by 1% from the previous harvest, reaching 9.6 million hectares. Favorable sugar prices have encouraged farmers to expand cultivation, indicating continued attractiveness in international sugar markets. Sugar and alcohol factories in Brazil have the flexibility to adjust their production ratios between ethanol and sugar. For the 2024/25 season, the USDA predicts a distribution of 51% for sugar and 49% for ethanol, deviating slightly from previous ratios.

Market Outlook

Despite challenges in the ethanol market and fluctuations in domestic consumption, Brazil remains poised to capitalize on stable domestic production and competitive pricing in international markets. The USDA underscores the importance of leveraging stable domestic production and favorable pricing to meet international demand effectively. With strong international demand expected to persist, Brazil's sugar industry is urged to maintain adherence to international standards while navigating market complexities.

Price drop in Europe

We talked to our market players in Europe about why the sugar price, which rose rapidly in 2023, dropped this year. According to market players, this decline will end when stocks run out in September. They foresee that the privileges granted to countries outside Europe affect them, but that these privileges will end.