Brazil's main south-central sugarcane region, responsible for about 90% of Brazil's sugarcane crop, will produce between 565 million metric tons and 590 million mt of cane next year, according to Nastari's first estimate for 2010-11, released at Datagro's International Conference on Sugar and Ethanol in Sao Paulo.

The increase is as much as 13% more than the 523.5 million mt to 533.5 million mt expected in the current 2009-10 year.

The current crop has been limited by rains that have been more than five times normal levels and an international credit crunch. A lack of credit prompted farmers to use less fertilizer and pesticides and limit investment in equipment to increase efficiency, he said.

Even with increased output, world prices for sugar are likely to remain high, he said. An increase in sugar output from Brazil will only amount to about half of an expected 7 million mt sugar deficit on the world market next year, he said, keeping prices high for all sugarcane-based products including ethanol.

"This has been one of our worst years in a long time and many of the conditions that caused it will continue into next year," he told reporters at the conference. "If Brazil, even with all its efforts to increase supply can't increase it much, the only thing that can adjust is price."

The factors keeping prices high on world and in domestic markets will continue well into 2010, he said.

Ethanol output will rise in 2010-11, he said.

Brazil's south-central region will produce between 27.09 million cu meters and 28.98 million cu meters of ethanol in 2010-11, or as much as 26% more than the 23.02 million cu meters and 23.48 million cu meters in 2009-10.

--Jeb Blount, newsdesk@platts.com