Porto Alegre, April 17th, 2024 – Unica’s most recent biweekly report, with data from the second half of March, besides obviously concluding the previous season’s accounting, showed that the second half of March continued as a period of progress in cane-crushing activity that had started back in the first half of the same month. It is no surprise that between the first and second half of March, processed cane volumes grew 126%, going from 2.22 to 5.04 mln tons. This is obviously the gradual and earlier-than-normal return of some mills to crushing the new 2024/25 crop, which occurred initially in the first half of March and has now occurred more intensely in the second half of the period.
This point leads to a second understanding of the final volumes of the previous crop, 2023/24, which, before mills brought forward crushing in March, had ended February with 647 mln tons, down 3 mln from SAFRAS & Mercado’s estimate for the end of the crop at 650 mln tons. However, as the two halves of early March still occurred within the 2023/24 season calendar, the balance is added by another 7.26 mln tons of cane processed over the two halves of the month that lead to the “accounting” closure of the season at 654 mln tons of cane, up 4.43 mln tons from SAFRAS & Mercado’s estimate.
Another important point to note in the most recent data from Unica is the sales of anhydrous and hydrated ethanol registered at the end of March. Still analyzing sales in the first half of the period, regarding hydrated ethanol and projecting for the second half of March (also considering one more day of average demand for the month), SAFRAS & Mercado projected sales of 1.92 bln liters of hydrated ethanol which were 4.92% above the volume actually seen in the month at 1.83 bln liters. These, in turn, even below SAFRAS & Mercado’s expectations, still managed to position themselves in an important way in comparison to the previous month, February, with an increase of 8.86% over the demand of 1.68 bln liters of that period.
The same can be said about anhydrous ethanol, which, with an estimated final demand for March at 956 mln liters, ended up having 2.0% lower volumes in effective sales at 937 mln liters. At this point, anhydrous ethanol did not have the same luck as hydrated ethanol, since at the margin, in relation to sales of 975 mln liters in February, it ended up showing a decline of 3.94% in terms of volume. This pattern of rising hydrated ethanol sales and falling anhydrous ethanol sales clearly reflects the level of greater share of demand of hydrated ethanol in the Otto Cycle seen since May 2023, which has remained firm and continued with its impact on demand, both from consumers at the pumps and at the distributors to mills. An interesting point is that SAFRAS & Mercado warns that this scenario should be eroded along the year, as the shortfall in the new 2024/25 crop will be 40 mln tons of cane, which will result in a supply reduction of 3.00 bln of liters of hydrated ethanol this season. One of the final points that draws attention in Unica’s report is about the mills in operation over the season, which, according to the entity, should be at least 230, at least until the end of April, with no indication of possible resumption of activities of cane crushing by other units in May. In general, it has become clear that ethanol production has been more prominent than sugar production in the first weeks of the season. But SAFRAS & Mercado warns that this movement is operational and seasonal in the short term, characteristic of the initial phases of cane crushing. In May and June, crushing should be much more dedicated to sugar.
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