Porto Alegre, June 3th, 2025 – The most recent report from Unica on biweekly cane crushing for the first half of May brought important information about the strong growth in crushing in the Center-South over the period. Looking at the margin, that is, the current fortnight against the immediately preceding one, we see that the first half of May saw a 136% increase in cane processing when comparing the 42 mln tons processed in the period with the 17 mln in the second half of April.
Before that, in the second half of April itself, the increase in the margin observed up until then was just over 8%. In that period, SAFRAS & Mercado warned that there had been a very low short-term growth in crushing compared to the standard of growth usually observed at this time of the season, when it is common to see growth patterns in the margin in triple digits, between 230% and 260%.
However, the data on the first half of May partially corrected the statistical anomaly that was observed up until the second half of April, with a short-term increase of 136%. Of course, these are triple-digit gains that are below the standard usually seen at this time of the crop. However, in the view of SAFRAS & Mercado, this is a crop scenario that leads to two possible interpretations.
The first is that the delay seen until then was the result of cane mills waiting as long as possible to continue the process of expanding crushing to give cane fields time to recover from the brief pause in rains seen in February this year. Therefore, according to this interpretation, the cane crushing curve will grow again as time passes, with the current data on the first half of May being the start of this movement.
The second possible interpretation is that the crop advance seen now in May is the continuation of a normal crop within its capacities, which will only overlap the long-term historical comparison, which is the 5-year average for the same period and that, even though crushing levels continue to grow, they will not be able to overlap the data from the previous crop, since the growth pattern, although in triple digits, is still well below the historical pattern usually observed at this time of the season.
SAFRAS & Mercado follows this second line of reasoning regarding the current data, albeit more pessimistic, but that better reflects the impacts of the drought, the fires of the previous year, and the consequent difficulty of mills in finding new cane seedlings to replace the plants affected in 2024 by adverse events. Another point that draws special attention of SAFRAS & Mercado is the issue of cane quality, which followed the same pattern of partial recovery in the short term.
The increase from 110 to 116 kg/ton between the second half of April and the first one of May was insufficient to place this crop’s cane quality standard above the standard of the same moment in the previous year, which was 124 kg/ton and also below the 5-year average for the same period, which also fluctuates in this same range.
Therefore, the first hypothesis for interpreting the current data, that the weak start of the current crop would give way to a more robust recovery, is also undermined by the cane quality data. Mills would be waiting to keep cane in the field for longer precisely to ensure that there would be a more significant recovery in the short term, which occurred minimally.
Looking at fuel sales data from mills to distributors, we can see that there is an inverted outlook for anhydrous and hydrated ethanol sales expected for the end of May. This is because anhydrous ethanol sales seem to be stronger in the short term than anhydrous ethanol sales. When we take the anhydrous ethanol sales data for the first half of May, at just over 483 mln liters, and add one more day of average consumption than the second half of the month, we arrive at a final demand outlook for May of 998 mln liters, which, once confirmed, should result in a 10% increase in the margin, compared to the April demand of 904 mln liters, in a growth of 0.15% over the same period last year.
If we perform the same procedure, we will see that sales of just over 828 mln liters in the first half of May for hydrated ethanol should result in final consumption of 1.71 bln liters, which will mean a decline of 8% YoY along with a 5% decrease in the margin.
