Fires in Brazil add to sugar problems despite minor damage

Recent fires in Brazil's sugarcane fields have helped to drive prices up to a five week high and exacerbated the problems with the crop.

The world's biggest sugarcane producer is still suffering from fires despite their limited damage.

Experts say that the mills will suffer from the fires, and the burned fields will have problems next year. This is despite the fact that the area affected by the fires was small compared to the Centre-South planted land.

Michael McDougall, a sugar broker based in New York, said: "It's not about the fire damage. It's a warning for the condition of the second half of the harvest and if it will affect the crop for 2025/26."

Orplana, a sugarcane growers' association, reported that around 80,000 hectares were burnt in the past week. This is slightly more than 1% the Center-South cane area, which totals 7.65 million ha.

According to Orplana's Chief Executive Jose Guilherme Nogueira the cane-growing land will have to be replanted following the fires. This will affect yields in 2025.

Experts said that the bigger concern is that some areas have not had rain for 160 days. This could reduce next year's potential production. Sao Paulo's state continues to be on high alert as dozens of municipalities continue to monitor for any new fires.

Tarcilo Rodriguez, director of trader Bioagencia, said that the Center-South had lost 80 million metric tonnes of sugarcane in 2021. He believes that something similar will happen in 2025 and adds that the current harvest could end sooner.

Unica, an industry group, said that the sugarcane yields were down 12% year-over-year in July due to low soil moisture.

Arnaldo correa, partner at Archer Consulting believes that current sugarcane production could drop to 580 millions tons, which is below the market consensus, 600 million to 610 million tons.

He stated that due to the uncertainty surrounding future production, some mills do not sign new contracts for sugar sales.

He said that there would be a long period between harvests in Brazil from October to April. Prices could rise as India is no longer on the export market, and there are a lot of funds short.

(source: Reuters)