Porto Alegre, July 8th, 2025 –The most recent data on cane crushing and by-product production published by Unica for the first half of June showed an atypical reduction in terms of short-term volume. Between the second half of May and the first half of June, cane crushing fell by 10 mln tons, or -19%, from 38.48 mln tons.
Sugar production followed suit, dropping 500,000 tons, or -17%, in the same period of analysis, with the biweekly supply falling from 2.9 to 2.4 mln tons. Unica indicated in its text section of the report that the Center-South does not have all of its mills in operation, with the region having only 95% of mills in effective operation in the first half of June.
This partly explains the production gap of 10 mln tons when we compare the data for the first half of June from the perspective of the evolution in the margin (current fortnight compared to the preceding one). However, those who are familiar with the market know that there is something more behind these numbers.
One of the main points that help explain the sharp decline in production volume is the issue of frequent heavy rains seen on cane fields in the Center-South in the first half of June. In fact, this factor effectively resulted in the slowdown of crushing in several units between northern Paraná and central São Paulo.
In addition, SAFRAS & Mercado warns that part of the second half of June had also been affected by rain, which lasted until the third week of the month. Only the fourth week of June had no rain because it was marked by the incidence of a strong polar air mass that, besides dropping temperatures, also caused the first incidence of frost formation this winter in the region, affecting cane areas even in the north of São Paulo, which is very rare.
With this, SAFRAS & Mercado warns that the data in the entity’s next biweekly report may still show some weak cane crushing figures due to the rain in the third week of June. Moreover, it was interesting to note that the entity’s report did not contain any indication or reference of the volume of cane that would be negatively impacted by frosts in the fourth week of June.
Of course, SAFRAS & Mercado warns that it is still too early for the effects of the frosts to be felt in cane fields, with the average timeframe being 8 to 10 days. Only then will the real negative impacts on the quality and quantity of cane be effectively measured by the market. Therefore, it is likely that the entity’s next biweekly report will provide some information in this regard when the cane crushing of the second half of June is updated.
Looking at ethanol, SAFRAS & Mercado also notes that the entity’s current report only mentioned an increase in the anhydrous blend in gasoline from 27% to 30%, without indicating how much demand this measure will actually result in. However, SAFRAS & Mercado has been pointing out since the beginning of the year that the increase should consume an additional volume of 1.65 bln liters of anhydrous in the accumulated 12 months, which will have a direct impact on the production and stocks of hydrated ethanol.
Regarding hydrated ethanol sales, the demand for 442 mln liters of anhydrous ethanol in the first half of June should result in a final anhydrous ethanol demand for the month of 1.08 bln liters. The demand for hydrated ethanol in the first half of June of 779 mln liters should result in total sales at the end of the month of 1.79 bln liters. Therefore, if the volumes are confirmed at the end of June, anhydrous ethanol should have gains in the margin of only 0.40% while hydrated ethanol should have a decline of 1.63%. However, YoY, anhydrous ethanol should have an increase of 10% while hydrated should have gains of only 0.92%.
