Main Points

The amount of cane processed in the first 15 days of October was slightly higher than expected, 19.7 mt of cane.
As a result, CS reached 487mtc and its cumulative sugar production went to 30.35mm.
Further migration of the mix to ethanol should result in a 32mmt sugar produced.

Crop 2021/22 – 1H October

Demand for anhydrous ethanol remains strong, with 430m liters sold in the first half of October.
This is a result of the migration of part of the consumption of hydrous ethanol to gasoline.
To meet demand, we saw the sugar mix turning more than expected for ethanol production.
In this fortnight, the sugar mix dropped to 39.1% vs. the 45% registered in the previous crop.

Adjusting for the next fortnights, we believe that the sugar crop in the Center-South should end with a production of 32mmt – a reduction of 500 thousand tons compared to our August estimate.

Despite the rains in the fortnight, operations in the field (harvest) presented a good pace.
19.7 mt of cane were processed in the fortnight.
With 47 fewer mills in operation than in the previous crop, the volume was expected to represent a drop compared to the same period in 2020 – a 47% reduction.
As a result, CS achieved a cumulative crushing of 487 mtc against 539 mtc last year

In order to reach our goals, over the next fortnights the Center-South needs another 33 mmt of sugarcane.
Assuming the pace of closure of the Center South mills announced by UNICA, and the step of operations, everything indicates that CS will be able to finish its harvest with 520 mmt of processed sugarcane.

The lower availability of sugarcane is a direct consequence of the weak agricultural productivity (TCH) in recent months.
Until September, the TCH presented a sharp drop of 15.5%, taking the cumulative productivity to 69.6 mtc/ha against 82.4 mtc/ha last year.
This behavior of agricultural productivity is a result of the intense drought seen since last year, the occurrence of multiple frosts and fires.
Cumulative Agricultural productivity so far is the lowest in the last 12 years.