SAO PAULO, April 20 (Reuters) - The area planted with sugarcane in Brazil, the world's largest sugar producer and exporter, fell to the lowest in 12 years in 2023 mostly because farmers switched to more profitable crops such as soybeans and corn, the government said on Thursday.
In its final report for the 2022/23 sugarcane crop (April-March), Brazil's food supply agency Conab said the area with sugarcane fell to 8.29 million hectares, 0.4% less than in the previous season and the lowest since 2011.
Conab said sugarcane planting fell in the No. 1 soy and corn region, the Center-West, and in the No. 2 grain region, the South.
"Many landowners that used to lease areas for sugarcane ended those contracts and instead planted annual crops such as soybeans and corn, which have a higher potential for financial gains," said the agency.
The sugarcane area in Parana, for example, Brazil's No. 2 grain state, fell 9%.
Sugarcane planting in Brazil is falling as sugar production worldwide faces challenges. India's crop was smaller than expected, and production in China was reduced due to dry weather. This situation is increasing sugar prices.
Despite the lower area, yields improved due to better weather. Brazil ended its 2022/23 sugarcane crop season with a 5.4% increase, or 610.1 million tonnes, above its forecast of 598.3 million tonnes.
Sugar output totaled 37.04 million tonnes, a 6% increase and 1.8% above Conab's previous estimate, while sugarcane-based ethanol production was seen up 0.5% at 26.53 billion liters.
The agency noted producers leaned more towards sugar than ethanol, citing their contractual obligations under forward sale agreements and the biofuel's loss of competitiveness over gasoline in the country.
"Global markets remained heated for sugar sales, as (Brazil's) main competitors - India, Thailand and Australia - have not been able to increase supply," Conab said. "All these factors make the sweetener's production more attractive." (Reporting by Gabriel Araujo; additional reporting by Marcelo Teixeira in New York; Editing by Steven Grattan and Richard Chang)
