Brazil’s next sugar cane harvest to fall but sugar production to rise

Brazil may see its first fall in sugar cane harvest in over a decade during the 2011/12 season. The reason being the drought of 2010 which is a consequence of the La Nina weather phenomenon.  Sugar cane harvests have increased by over 50% in the past decade. The Center South’s harvest ended in January with approximately 557 million tonnes of sugar cane against 596 million tonnes forecast.  Rains over the next few months will be an indicator of what to expect during the next harvest.

However, sugar production is still forecast to increase as less sugar cane is expected to be diverted to ethanol production while sugar prices are at near 30 year highs. With this increased sugar production aimed at capturing higher sugar prices and increased revenues, sugar prices may be substantially lower by the end of the year due to the excess world supply that may follow.

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