South America Calling

I wrote last week about the impact of two freezing nights in late July on wheat and corn production in Brazil's Parana state.

The damage was not restricted to grain fields. Sugarcane in Parana and Mato Grosso do Sul was also badly hit.

Up to 65 million metric tons (mmt) of cane, or 18% of Brazil's crop still in the fields, was hurt by the frost in these two minor producing state, Plinio Nastari, president of Datagro, Brazil's most respected sugarcane industry consultants, told Reuters.

The loss comes at a time when Brazil needs to ramp up sugarcane production to satisfy local demand for ethanol as well as feed its export markets for sugar and ethanol. Cane output was to rise 11% to 589 million metric tons (mmt) this harvest, which started in April and ends in November, said the Brazilian Sugarcane Industry Association (UNICA) before the frost.

The true impact of the cold snap will become clearer in the next month.

Sugarcane crops can be saved but harvesting must be carried out immediately. However, immediate harvesting means many plants are cut down before they have optimum sugar content.

Many other crops will inevitably rot as there won't be sufficient time for farmers to harvest all the affected fields.

Last week, Biosev, the local sugar and ethanol wing of France's Louis Dreyfus, announced a 10% to 14% cut in forecast cane production this season because of the frost in Mato Grosso do Sul.

Similarly, Biosul, the Mato Grosso do Sul biofuel producers association, estimated losses of 17%.

Mato Grosso do Sul is Brazil's No. 5 sugarcane state, producing only a fraction of that turned out by neighboring Sao Paulo state -- Brazil's sugarcane powerhouse. Still, it is a growing area and one in which frosts are not uncommon.

The frost and early harvesting will mean there is much more glucose and fructose in the cane and less sucrose, making it more suitable for ethanol than sugar production.

As a result, it is unlikely that ethanol production will fall in line with cane production. UNICA currently forecasts the center-south region will produce 25.3 billion liters of ethanol and 35.5 mmt of sugar. Those figures will have to be lowered.

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