Droughts have plagued North America cutting corn output to a 16-year low, while monsoon rainfall has been 12% lighter in areas of India and even more in other regions. But in Brazil, even though excessive rains pushed harvesting back, the 2012 yield still rose to 571 million metric tons. Estimates peg next year’s crops as being bigger than ever, due to the same unusually rainy conditions. The harvest season ending in 2010 saw yields of 541 million, and in 2011 yields grew slightly, to 557 million metric tons. But next year’s yield is being forecast to be even larger – 5.4% larger – at 602 million metric tons.
Also in Brazil, Coca-Cola contracted JBF Industries to produce ethylene glycol in Araraquara, Sao Paulo, for partially bio-based PlantBottle PET. JBF will build a new plant starting at the end of 2012 and will produce 500,000 metric tons/year; it will take two years to complete.
But aside from the feedstock and materials developments, there’s money flowing, too, in Brazil. Brazilian national development bank, BNDES, and research-financing agency, Finep, have earmarked $988 million for bio-based chemicals and biofuels investment to be placed this year ($148 million), 2013 ($345 million), and 2014 ($493 million). They emphasize only “several projects” will be pursued. Dow Chemical, Braskem, and DuPont each passed the initial selection phase for their proposals to build projects collectively worth more than $1.5 billion. DSM has already been approved to receive funding for succinic acid from sugarcane. Previously, the two organizations contributed $493 million to research on cellulosic ethanol production, gasification, and other value-added derivatives of sugarcane.
For any that doubt, Brazil’s sugarcane continues to put it on the map of bio-based chemicals and biofuels production hotspots, although a recent conversation highlighted that, ironically, corn was less exposed to food price increases than sugarcane, since sugarcane prices track with sugar, a commodity more tightly linked to food price trends than corn, which is largely used for feed and ethanol. Brazilian government support for sugarcane production and downstream conversion activities is strong, and the Brazilian bio-chemical industry has a reputation for translating technology into commercial successes well. Whether it be to keep tabs on a formidable competitor or to understand the landscape in Brazil to explore forming a valuable partnership to secure feedstock or to access sugarcane-derived material, clients are advised to monitor Brazil’s sugarcane harvest and consider it when making decisions about feedstock supply. Though this year’s droughts are not expected to repeat next year, contingency plans for less likely – and even more unlikely events – are advised, as volatility in weather yields volatility in crop yields.