Sao Martinho flagged the potential for Brazil's main cane-growing region to raise its sugar production – assuming no weather upsets – as it forecast its own output increasing by more than 10%.
The sugar and ethanol producer in Brazil's key Centre South district, which is responsible for some 90% of domestic sugar output, forecast its sugar output growing by 10.2% to 1.36m tonnes in the newly-started 2016-17 season.
That would represent a sharp improvement on output last season, when Sao Martinho's sugar output was flat at 1.23m tonnes – despite a 7.0% increase to 20.0m tonnes in the volume of cane crushed.
And the changes in the group's performance are down little to changes in the mix of cane processed into ethanol rather than sugar, with the group keeping the split roughly equal over at least the past three seasons.
Instead, the Sao Martinho data highlight the potential for increasing sugar production thanks to the recovery in the levels of sugars in cane, which were depressed last season by wet weather.
Sao Martinho cane crush, % processed into sugar, (sugar output)
2016-17: 20.553m tonnes, 51%, (1.356m tonnes)
2015-16: 20.024m tonnes, 50%, (1.230m tonnes)
2014-15: 18.718m tonnes, 49%, (1.231m tonnes)
2013-14: 15.593m tonnes, 48%, (986,000 tonnes)
Sao Martinho forecast the TRS of the cane its will crush this season recovering by 5.3% to 135.7 kilogrammes per tonne of crop.
That is in fact greater than the 1.0% increase to 133.2 kilogrammes per tonne of cane that official crop bureau Conab has forecast for the Centre South this season, while analysis group Job Economia has put the increase at 1.8%, to 133.5 kilogrammes.
On cane processing volumes, Sao Martinho was relatively downbeat, seeing its crush rise by 2.6% this season to 20.6m tonnes.
Estimates for Centre South cane crush 2016-17, (2015-16 estimate)
Conab: 637.7m tonnes, (616.8m tonnes)
Job Economia: 644m tonnes, (605m tonnes)
"The restriction of industrial capacity is responsible for the standing cane," Job Economia said in a report last week.
Sao Martinho finance director Felippe Vicchiato has told investors that the 20.0m tonne cane crush the group achieved in 2016-17 was equivalent to "almost 100% of my installed capacity for crushing in all my units".
Sao Martinho shares stood 2.7% higher at R$46.13 in late deals in Sao Paulo.