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Corn overtakes sugar cane as ethanol feedstock in Brazil

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Brazil’s low season for cane crushing is proving particularly downbeat, with processing volumes reaching their lowest in a decade – leaving corn, unusually, as the country’s top ethanol feedstock.

 

Cane processors in Brazil’s Centre South, responsible for some 90% of the country’s sugar and ethanol output, crushed just 166,420 tonnes of the crop in the first half of this month, industry group Unica said.

 

A sharp fall-off is typical at this time of year, when mills take outages for the Centre South rainy season, cutting crush volumes well below levels which reached just short of 50m tonnes in the second half of July.

 

However, the decline this time has proved particularly steep this season, with Unica noting that “this is the lowest volume for [the first half of January] within the last 10 years.

 

“In the first 15 days of January 2017, processing amounted to 1.18m tonnes” - a volume seven times as much as mills handled in the same period this year.

 

‘Intense rains’

 

The decline in volumes reflected “intense rains”, hampering cane harvesting, besides the small number of mills still open although, at six as of mid-January, it was two higher than Unica reported at the start of the month as in operation.

 

Indeed, with such few crushers operating “milling in January and February will be marginal”, said Antonio de Padua Rodrigues, the Unica technical director.

 

Volumes for March - when many mills reopen, ahead of the official start of the processing season on April 1 – “will depend on the weather conditions observed in the period”, he said.

 

Corn vs sugar

 

The weak crush volumes in the first half of this month were reflected in both weak Centre South output of sugar, which dropped 92% year on year to 2,830 tonnes, and of ethanol, for which Unica reported volumes of 42.5m litres, down 37% year on year.

 

However, of the 42.5m litres in ethanol output reported most -- 33.55m litres – was actually produced using corn, rather than sugar cane, as their feedstock.

 

"Majority share of the [ethanol] production observed in the first half of January refers to corn ethanol,” Mr Rodrigues said.

 

Flex feedstock

 

Brazil - whose appetite for ethanol is spurred by the prevalence of “flex fuel” cars, which can operate using either the biofuel or gasoline – is developing flex feedstock plants too, able to turn either corn or cane into biofuel.

 

Since the first such plant opened in 2012, a further five have been built by companies including Cluster de Bioenergia, with three more planned for Mato Grosso.

 

While Mato Grosso is the main corn growing state, its distance from port means farmers swallowing a hefty price cuts to get their crops into export markets, making sales for domestic use attractive.

 

Some grain-only ethanol capacity is also being developed, with construction scheduled to start this month on a second facility in Brazil, also in Mato Grosso.

 

Performance so far in 2017-18

 

Wednesday’s Unica data showed Brazil’s overall cane harvest for 2017-18, starting in April, had reached 583.6m tonnes as of January 15, a decline of nearly 10m tonnes year on year.

 

Sugar output, at 35.83m tonnes, remains some 580,000 tonnes higher than a year ago, with relatively high sugar prices earlier in the season encouraging mills to process more cane into the sweetener rather than ethanol, and with higher crop quality boosting production too.

 

The cane allocation to sugar, at 46.9% so far this season, is up 0.3 points year on year.

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