Netherlands-based Rabobank has published an analysis predicting sugarcane production in Brazil’s center/south region will rebound strongly during the 2013-’14 harvest, resulting in a significant increase in both sugar and ethanol production.

The report, titled “The Brazilian Ethanol Connection,” focuses primarily on the world sugar market. However, within the report Rabobank notes that it is difficult to develop a complete view on the outlook for Brazilian sugar production without addressing ethanol supply, demand and prices.

The center/south region of Brazil is responsible for approximately 90 percent of total Brazilian cane production, while Brazil is accounts for nearly 45 percent of global sugar exports. For this reason, the decision of whether to produce ethanol or sugar by Brazilian mills has a significant impact on world sugar prices.

 According to Rabobank, its analysis suggests that local ethanol prices in Brazil during 2013-’14 would remain firm, averaging BRL 1.27 (64 cents) liter over the season, which is equivalent to a New York raw sugar price of approximately 19 cents per pound.

During the last two growing seasons, cane production in the center/south region of Brazil was well below trend. Rabobank attributes this to both lower rates of replanting and unfavorable weather events. However, Rabobank predicts a strong rebound in cane production, from 532 million metric tons in 2012-’13 to as much as 580 million metric tons in 2013’14.”Assuming an increase of this magnitude in cane production in 2013-’14, production of both sugar and ethanol in the centre/south could rise significantly,” said Rabobank in the analysis.

Overall, the organization predicts a total of 27.2 billion liters (7.19 billion gallons) will be produced in the center/south and north/northeast regions of Brazil. In its report, Rabobank also said it expects Brazil to export approximately 3.5 billion liters of ethanol in 2013-’14.