The 2023/24 season that begins in April in the Center-South of Brazil may see an increase in sugarcane production, due to higher productivity. Estimates indicate that the Center-South region may produce 560 to 595 million tons of sugarcane, compared to 538.98 million tons in the current 2022/23 season (data up to December 16), according to data from Unica. Regarding the production mix, there is still no final position from the mills, but among the main factors that should guide this decision are the direction of the current federal government and the pricing policy to be adopted by Petrobras, which may define the relative competitiveness of ethanol with gasoline. For now, estimates are that sugar production in the Center-South region will grow and total 36 to 37 million tons in the 2023/24 season. The national sugarcane sector is starting 2023 with uncertainty regarding sugarcane production in the 2023/24 harvest in the Center-South region of the country, which officially begins in April. According to Cepea researchers, consultancies that make estimates differ in projected volumes of around 40 million tons, but all indicate some increase in crushing. For ethanol, specifically, a prospective analysis of the market should address international conditions expected for fossil fuels, even though there is still no definition on the price pass-through policy to be adopted by Petrobras. Fuel market analysts believe that, in 2023, the average price of oil should be below that seen in 2022, based on the slowdown in the global economy. Despite the expected reduction in the price of fossil fuels in 2023, it should still operate at levels higher than those recorded in 2020 and 2021, which minimizes the “ceiling” effect that is adverse to the renewable fuel market. In addition to the speed at which international oil and oil product prices are transferred to domestic prices, other factors are causing great uncertainty about the price levels that will prevail in the domestic renewable fuel market, especially the reduction of federal taxes (PIS/COFINS reduced to zero). Other factors to be considered are the continued establishment of the ICMS tax rate ceiling and the reduction of the calculation basis for this tax by the states.
Source: Cepea