August 28, 2017 / 6:32 PM / a year ago

UPDATE 1-Brazilian mills cut sugar production, boost ethanol output

 (Adds report details, Unica comment, table)
    SAO PAULO, Aug 28 (Reuters) - Brazilian mills reduced the
amount of cane they use to produce sugar in the first half of
August, increasing the use of the raw material for ethanol
production as demand and prices for the biofuel improved, cane
industry group Unica said on Monday.
    Mills in Brazil's center-south region, the country's main
cane belt, earmarked 50.04 percent of cane in the first half of
August to sugar production, the smallest share in the last two
    Unica said 40 percent of the plants able to produce both
sugar and ethanol had shifted toward the biofuel early this
    "That is happening due to a more favorable arbitrage toward
ethanol. It is normal that mills opt for the product that is
giving them better returns," the group said in an email to
Reuters after the release of biweekly crushing numbers.
    Brazil's center-south region produced 3.16 million tonnes of
sugar in the first half of August, compared to 3.41 million
tonnes in the previous two-week period. Mills crushed 45.29
million tonnes of cane in the period versus 50.74 million tonnes
in late July.
    Ethanol production fell to 1.95 billion liters from 2.08
billion liters late in July.
    Unica said sales of hydrous ethanol, used by flex fuel
vehicles popular in Brazil that can operate on gasoline or the
biofeul, jumped 14 percent in the first half of August from the
second half of July. Brazil's fuels market is demanding more of
the product after a recent change on taxation increased
ethanol's competitiveness against gasoline at the pumps.
    Despite that boost from ethanol, the production mix is still
heavier on sugar this year compared to the last season, both for
the first half of August and year-to-date figures. (Unica's full
report: here )
    See below detailed figures from Unica's crop report for the
first half of August (cane and sugar in million tonnes, ethanol
in billion liters, total recoverable sugar-TRS in kg per tonne):
                  2016/17    2017/18    PCT CHANGE
 CANE CRUSH       45.13      45.29        0.34
 SUGAR OUTPUT     2.97       3.16         6.02
 ETHANOL OUTPUT   1.94       1.95         0.23
 TRS (kg/T)       142.63     146.29       2.57
 CANE TO SUGAR    48.57 pct  50.04 pct  
 CANE TO ETHANOL  51.43 pct  49.96 pct  
                  2016/17    2017/18    PCT CHANGE
 CANE CRUSH       357.23     342.61      -4.09
 SUGAR OUTPUT     19.95      20.72        3.86
 ETHANOL OUTPUT   14.82      13.52       -8.79
 TRS (kg/T)       129.20     130.43       0.96
 CANE TO SUGAR    45.37 pct  48.67 pct  
 CANE TO ETHANOL  54.63 pct  51.33 pct  
 Source: Cane industry group Unica

 (Reporting by Marcelo Teixeira and José Roberto Gomes; Editing
by Paul Simao)
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