Brazil's centre-south sugarcane crushing came in below market expectations late in June, data from industry group Unica showed, with sugar output falling from last year as mills kept betting on ethanol and yields remained under pressure.
Crushing totalled 41.87 million tonnes in the second half of June, down 7.9% from a year earlier, while analysts polled by financial information provider S&P Global Commodity Insights had expected it to reach 42.63 million tonnes.
Sugar output reached 2.48 million tonnes in the period, a 14.98% drop, while ethanol production - including fuel made from corn - was down 3.9% to 2.02 billion litres.
Analysts had estimated sugar production at 2.53 million tonnes and sugarcane-based ethanol output at 1.98 billion liters, according to S&P Global Commodity Insights.
Local mills have prioritised ethanol production so far this year, taking advantage of high biofuel prices, but are expected to allocate more of their sugarcane crop to the sweetener from now on, according to S&P.
In the second half of June, 54.54% of sugarcane output went to ethanol production, Unica said, against 52.4% at the same time last year and an expected 54.66%.
Antonio de Padua Rodrigues, Unica's technical director, noted in a statement that the yields picture in Brazil was still not looking good, even with a 1.1% improvement last month.
He said that considering the crop so far, after three months of harvesting, cumulative agricultural yields are still 0.8% below the same period last season.
Padua said, however, that he still expects a larger total crushing volume at the end of the season compared with the previous that was hurt by drought and frosts.
Brazil's centre-south has seen lower raw material quality in 2022/23, with cane sugar content down 3.3% in late June and 4.35% so far this crop, Unica added.