What is the most likely scenario for Brazil’s CS 2018/19 cane crop season?

As the CS Brazil 2017/18 cane crushing season is nearing its end, with almost 78% of the current season completed by September, the market is turning its eyes towards the first prospects of the next crop season of 2018/19. However, anyone who embraces this job of crop forecasting knows full well what we have to deal with right now to make these first predictions: uncertainties. Erratic weather behavior, mills facing tight cash flow amid needed investment plans for planting renovation and cane treatment, a much more volatile oil market, which has been increasing shaping Brazil’s ethanol parity, are some of main aspects to take into account in order to unfold the most likely scenario to work with. Although it is considered early to quantify how much cane is expected to be crushed in CS Brazil in 2018/19, at least we know that there has been a growing consensus that the market will have to bear an even more challenging price condition in 2018 as the world oversees a surplus in the S&D and trade flow balances.

Nevertheless, the first pieces of this puzzle are looking less favorable than we thought. The dry weather between late June and September has already delayed the cane sprouting as well as planting operations, something that could be still offset if rainfall improves by April next year, since only a negligible area of land has displayed ratoon death so far this year. A higher number of spot fires is also a worrisome factor. On the other hand, despite low sugar prices, producers in CS Brazil are still making efforts to keep investments in cane treatment as updated as possible, a variable, by the way, that made the difference in 2017/18 since it counterbalanced a more aged cane condition. Investments in cane renovation, however, might remain below optimal rate to keep cane fields from aging.

As we have much more to discuss, DATAGRO invites you to attend the 17th International DATAGRO Sugar and Ethanol Conference to be held on November 6 and 7 in Sao Paulo, Brazil. Please, click on this link for further information: https://www.conferenciadatagro.com.br//en/.

We are looking forward to seeing you there.