• Rains in CS have improved since 2H of February; 
• Forecast for March currently shows rains could end above historical average; 
• With such positive news, does this means the worries are over? 

Distribution 

Cane Development Model

• The development of around 60% of the cane to be harvested in 2019/20 depends significantly of rains in Q4 and Q1; 
• Looking at the cumulative figure for Q4, the volume is above historical average – as is February; 
• However, not only volume is important but distribution as well; 
• Until December, rains were excellent in CS; 
• However, afterwards until mid-February the region saw a dry spell; 

What’s next? 

CS Monthly Rains  

• Today’s weather forecast predicts rains for the upcoming weeks, taking total March precipitation to 179mmt – 17% above average – and with a good distribution; 
• Although the recent rains brought a much needed relief, over 2 months of lack of rains had an impact in the cane fields; 
• We reckon that the impact will be evident specially in ag yields of the cane harvested over the initial months of the season; 
• However, if weather behaves in line with historical averages for the remainder of the crop, the overall impact could be minimized; 

 Additional Factors 

• Of course rain plays a significant part in cane development, but cane field maintenance and age cannot be overlooked; 
• The majority of the sugarcane sector in CS Brazil still suffers financially, which means that cane fields renovation and maintenance have not been carried out properly this past season; 
• These additional factors can make cane more susceptible to adverse conditions, impacting TCH (ag. yields); 
• Furthermore, areas planted in Q2 last season passed through a severe drought and not all could be replanted, which means that the starting TCH is already lower; 

Conclusion 

• Although the current combination of factors points to a downside, we have to remember cane is a resilient crop, just look at last year.  
• After the drought from Feb-July, excellent rains until November saw cane fields recovering enough to diminishing the fall of TCH to 3.7% – whilst initial estimated pointed toover 5% of reduction in ag. yields for 2018/19; 
• Therefore, in order to draw a more clear outlook for cane availability, we need to wait for the end of the rains this month; 
• For the moment we remain with 552mmt;