Farm Futures logo

Higher soybean prices may contribute to greater sugarcane production.

James Thompson, Author

January 23, 2020

2 Min Read

You might not end up selling as much ethanol to Brazil in 2020 as last year. The country’s slow pace of economic recovery combined with a forecast increase in Brazilian domestic ethanol production may mean there’s a bit less demand for the U.S. product. The greater production will likely come not only from greater cane production but also from more of that crushed cane being devoted to ethanol and less to crystal sugar.

Brazil’s main sugarcane industry association said last week that Brazil’s 2019-20 total ethanol production should be up 7% over the prior period. The sugarcane year starts April 1 and goes through March 31.

The numbers

According to Agencia Brasil, a news agency, Brazilian 2019-20 ethanol production should be a bit more than 8.7 billion gallons, against just under 8.2 billion gallons last time around. Exports, meanwhile, are slated to reach 423 million gallons. The lion’s share of Brazil’s ethanol exports go to the U.S., some of it in the form of the normal swapping between the two countries in order to moderate prices and keep stocks more or less even throughout the year.

At the same time, experts at the sugarcane association representing most of Brazil’s producers and distillers are calculating that, this time around in the April to April year, an additional 714 million gallons will be available for domestic use. As a result, some 8.9 billion gallons in total would go to the domestic Brazilian market. That that would mean Brazilian ethanol exports are likely to end the 2019-20 marketing year at 423.3 million gallons, with imports-- mostly from the U.S., at 330 million gallons or so during the period.

Why more ethanol?

The amount of recoverable sugars for each ton of raw sugarcane harvested is up about 3% over previous years. That may have to do with recent solid soybean prices which have encouraged sugarcane producers to rotate their cane field into a legume like soybeans a bit more frequently (usually, it’s considered most efficient to rotate cane with soybeans after the fifth year of sugarcane production.) In addition, more of that greater sugarcane production is going to ethanol this year.

But don’t worry too much. It’s not as though anyone thinks the bottom will drop out of your Brazil market because Brazil will have a little more supply and a relatively flat demand. But a return to more frequent sugarcane-soy rotations should, in general, increase Brazil’s sugarcane production. And every time tensions with Iran, Libya, Venezuela or another petroleum producing country go up, it makes ethanol production that much more attractive to the Brazilians.

Read more about:

Ethanol

About the Author(s)

James Thompson

Author

James Thompson grew up on farms in Illinois and Tennessee and got his start in Ag communications when he won honorable mention in a 4-H speech contest. He graduated from University of Illinois and moved to Tocantins, Brazil and began farming. Over his career he has written several articles on South American agriculture for a number of publications around the world. He also edits www.cropspotters.com, a site focusing on Brazilian agriculture.

Subscribe to receive top agriculture news
Be informed daily with these free e-newsletters

You May Also Like