StoneX predicts that Brazil's sugarcane crush will fall in 2025/26 due to bad weather and fires

StoneX, a consultancy, said that the center-south region of Brazil is expected to crush sugarcane at 593.2 millions metric tons by 2025/26. This represents a 3.2% decrease from the previous year, as bad weather and fires have affected the main producing area.

According to StoneX, this would be the second consecutive season in which cane crushing declined in Brazil's main belt of sugar. The company estimated a 6.3% decline in 2024/25, after the previous cycle reached a record.

StoneX, in a recent report, said that initial prospects for 2025/26 were still uncertain. They added that rains will be "extremely necessary" starting in October because the region is in "severe deficit" of water since November 2023.

Brazil, with 70% of sugar exports, is experiencing a drought that has affected crops such as sugarcane. Fires that have raged across the country in recent months have caused further concern among producers.

StoneX expects that the area harvested in Brazil's middle-south will decline by 1.2% to 7.61 million ha (18.8 acres) in 2025/26, due to the recent fires.

Sugar has proven to be more profitable than ethanol. With raw sugar futures this week reaching a seven-month peak on ICE, due to concerns over Brazil's dry climate, it is expected that mills will allocate more sugarcane for production of sweetener by 2025/26.

StoneX estimates that 51% (up from 48.4%) of sugarcane in the new season will be used to produce sugar.

The consultancy estimated that sugar production for 2025/26 would be 40.6 million tonnes, an increase of 2.5% from the previous year, but still lower than the record 42.4 million tonnage set in 2023/24.

The production of corn-based fuel ethanol was expected to grow by 12.5%, to 9 billion liters. (Reporting and writing by Andre Romani, Kirsten Doovan, Gabriel Araujo)

(source: Reuters)