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Brazil's sugar, ethanol sector expected to grow next season as weather improves

By Nayara Figueiredo and Roberto Samora

SAO PAULO, Oct 25 (Reuters) - Brazil's sugar and ethanol industry is expected next season to continue its recovery from an historic drought, as better climate conditions in sugarcane producing areas and larger investments in the crop boost production.

Agricultural consultancy Datagro said during the international sugar and ethanol conference in Sao Paulo that Brazil's centre-south sugarcane crop in the 2023/24 season (April-March) will reach as high as 590 million tonnes from the 542 million tonnes expected for the current season.

The fields continue to recover from the disastrous 2021/22 season when the worst drought in nine decades and the harshest frosts in 40 years reduced sugarcane production to only 523 million tonnes.

Datagro said sugar output next season could grow to up to 38.5 million tonnes from the current 33.2 million tonnes and last season's 32 million tonnes.

Brazilian farmers have had normal to above-normal rains in the current spring in the Southern Hemisphere, the first time in three years that precipitation levels are back to historical averages.

That is helping cultivation of sugarcane, but also coffee, with analysts expecting a large crop next year. Grains are also benefiting, as farmers are planting soybeans and corn at the fastest pace in years due to ample soil moisture.

During the Sao Paulo conference, Chinese commodities trader COFCO, which has a large operation in Brazil that includes grains, coffee and sugar, projected the next sugarcane crop to be in a range of 575 million to 595 million tonnes due to expected higher agricultural yields for cane fields.

Both Datagro and COFCO said that the amount of sugar production next year will depend on other factors including fuel taxation in Brazil.

The South American country has removed federal taxes on fuels this year, which reduced the price advantage of ethanol over gasoline. If taxes return next year, there will be more ethanol production and not so much more sugar. (Reporting by Nayara Figueiredo and Roberto Samora, additional reporting by Gabriel Araujo; Writing by Marcelo Teixeira in New York; Editing by Paul Simao)

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