Brazil's sugarcane grower association União da Indústria da Cana-de-Açúcar (Única) has lowered its estimate of this year's sugarcane harvest by slightly over 6%, to around 533.5 million tons.
According to Única, a number of factors are responsible for the smaller harvest: older sugarcane fields have lower yields, there was drought between April and August 2010, frost hit fields in São Paulo, Mato Grosso do Sul and Paraná last month (June) and, finally, a biological phenomenon known as flowering (florescimento) that reduces productivity and the concentration of sugar in sugarcane plants.
Única also announced that with regard to how the harvest will be divided between ethanol and sugar production, it has raised estimates of the percentage of sugar that will be produced to almost 47%, up from 45.5%, with the result that ethanol production will be just over 53%, totaling 22.5 billion liters, a reduction of around 11%, compared to the last harvest.
The reduction occurs against a background of rising production of "total flex" cars in Brazil that can run on either ethanol or gasoline, or any combination of the two fuels.
In 2004, 400,00 flex cars came off assembly lines in Brazil; last year almost 3,000,000 of them were manufactured. Consumers are buying them like hotcakes, but it has been uneconomical to use Brazil's sugarcane-based ethanol for most of the last two years because of its price.
Because of a difference in energy density, Brazilian ethanol has to cost less than 70% of the price of gasoline to be economical - mileage is 30% less with ethanol than with gasoline.
At the same time, Única says it expects Brazil to export 1.35 billion liters of ethanol this year, a drop of 23.6%, compared to 2010.
As for sugar, according to Única, over 23 million tons should be exported. In 2008, Brazil exported some 13.4 million (metric) tons of sugar.
Brazil's farm sector (agronégocio) turned in another strong performance in June with exports totaling US$ 8.9 billion and imports at US$ 1.3 billion, for a surplus of US$ 7.6 billion. Compared to June 2010, exports were up 29.1%, imports rose 32.5%.
China, now Brazil's biggest trade partner, increased imports from Brazil by 33.7% in June. Exports also rose sharply in June to Spain, up 148%; to Russia, up 110%; to Japan, up 64%; and Germany, up 58%.