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Thailand (Bualuang): Agro & Food -Sugar: USDA cuts Brazil’s 2021/22 output

  • USDA revised down Brazil’s 2021/22 cane and sugar output

  • USDA maintained Thailand’s 2021/22 cane but sliced sugar output

  • Brazil’s 2021/22 yields are projected at 63.1 tonnes/hectare

Bualuang Securities
12 October 2021

We see a positive development in USDA’s Sep/Oct GAIN (Global Agricultural Information Network) report in which it revised down Brazil’s 2021/22 cane and sugar output and trimmed Thailand’s 2021/22 sugar output estimate slightly. Despite Thailand’s YoY rise in 2021/22 cane and sugar output, its stocks look set to drop sharply YoY due to a surge in exports. We reiterate a TRADING BUY on KSL, led by persisting sugar price up-cycle through 2022.

USDA revised down Brazil’s 2021/22 cane and sugar output

In its GAIN report titled Brazil: Sugar Semi-Annual 2021 of Oct 5, 2021, USDA revised down Brazil’s cane output for 2021/22 by 7.1% (from its previous estimate of 635m to 590m tonnes). This would be a 10.2% YoY drop from 657m tonnes in 2020/21. In particular, the 2021/22 south-central (SC) cane output is projected at 535m, down 11.6% YoY from 605m tonnes in 2020/21. Several factors contributing to Brazil’s sugar cane reduction include: 1) dry weather that prevailed in 2020 resulting in lower yields and cane output; 2) below-average rainfall during Jan-Sep 2021 limiting the stock buildup, 3) high temperatures that favor natural fire outbreaks in the fields and intentional illegal fires set in sugarcane fields to clean them up and facilitate the harvest and 4) three severe frosts in the SC sugarcane fields during Jun-Jul 2021 damaging fields to be harvested.