Porto Alegre, May 19th, 2025 –Unica’s latest biweekly report with data on the second half of April had a strong impact on the market, along with an intense surprise regarding the level of decline in production volumes in the period. The market was severely impacted by the unusual slowdown in the year-to-date figures for this stage of the crop, as was the case with the volume of cane crushing, which fell 49% YoY and 32% YTD. Sugar production also fell 53% YoY, besides a 38% decline in the YTD figure.
It is clear that the evolution in the margin (current fortnight versus the preceding one) showed positive levels of progress, even though there was a strong slowdown in the intensity of growth patterns between the first and second fortnights. In the second half of April, fortnightly sugar production rose only 7% (compared to a 262% increase in the margin in the first half of April), while sugar production increased only 18% (compared to a 260% increase in the first half of the month).
In the textual part of the report, the entity pointed to the rain that hit key cane production regions in eastern São Paulo and other states in the Midwest as the reason for the steep reduction in cane crushing and production of derivatives at a time when the growth pattern in the margin usually fluctuates in triple digits, given the strong statistical load at the beginning of each crop.
Moreover, SAFRAS & Mercado draws special attention to the continued low concentration pattern of the production mix for ethanol, even though it continues to capture most of the cane for its production. However, the capture level has been lower every fortnight since the first half of March, when many mills began crushing cane in advance for the new 2025/26 crop. On an individual basis, mills historically present production mix patterns between 70% and 100% for ethanol in the first four fortnights of the crop. However, in March 2025, the first and second half of the month were marked by production mix levels of 69% and 56%, respectively. Now, in April, the first and second halves of the month are marked by production mix patterns of 55% and 54%, respectively. This has reinforced a scenario of moderate declines in ethanol prices in the physical market, in a scenario in which exponential declines have historically been observed, given the seasonality of the period. Furthermore, when looking at the sales data for hydrated and anhydrous ethanol from mills to distributors, a divergent scenario can be seen between them.
In April, total demand for anhydrous ethanol hit 904 mln liters, down 13% from the previous month, although it was 0.27% higher than in the same period last year. Last month, SAFRAS & Mercado had estimated demand for anhydrous ethanol at 934 mln liters, which was 3% higher than the effective data for the period. For hydrated ethanol, we see the opposite scenario in the short term, with sales of 1.80 bln liters, up 6% from the previous month, albeit 2% lower than last year.
In the previous month, SAFRAS & Mercado had estimated hydrated ethanol sales in April at around 1.78 bln liters, down 1.4% from the effective sales in the period. In general, SAFRAS & Mercado believes that production data significantly lower than expected by the entire market should provide support for the rise in sugar and ethanol prices, in both domestic and foreign scenarios.
