Brazil sugar cane harvest bigger than expected -Raizen

(New (KOSDAQ: 160550.KQ - news) throughout, adds details on crop, comment from COO Mizutani)

By Marcelo Teixeira

SAO PAULO, July 7 (Reuters) - Brazil's 2015-16 sugar cane harvest will be bigger than expected due to favorable weather, the chief operating officer of Raizen, the country's largest sugar and ethanol producer, said on Tuesday, and the company's own production will be at the high end of its predicted range.

COO Pedro Mizutani said Brazil's center-south cane crop should approach 600 million tonnes, but added that mills may struggle to crush the entire crop if July turns out rainier than expected.

"We are sticking to (guidance of) 57 million to 60 million, but closer to 60 million than 57 million" for Raizen's expected cane production, Mizutani said on the sidelines of the Ethanol Summit in Sao Paulo, organized by the Unica cane milling industry association.

"Really, agricultural yields have shown to be above expectations," Mizutani said, adding that good weather so far this season has helped the cane crop recover from last year's drought.

Brazil's larger milling groups such as Raizen, which is a joint venture between Brazilian conglomerate Cosan SA and Royal-Dutch Shell PLC, said in recent weeks that they would favor sugar production more than initially expected.

This comes despite the multi-year lows the sweetener's price has posted recently on the futures markets.

Mizutani said many cash-strapped mills in the center-south cane region are favoring ethanol production because of the ease of selling it on the local market compared with sugar exports, which require export financing and time to generate revenues.

"Everyone is favoring ethanol. It has greater liquidity. We don't have a liquidity problem," Mizutani said. "We need to assess what is best in terms of the market. At the moment, it continues to be sugar."

The executive did not rule out shifting Raizen's production mix more toward ethanol later if demand for the biofuel proves robust.

Crushing officially began in April, and shipments and loading of sugar at Brazil's ports have been normal so far this season.

Mizutani did express concern that too much rain in July, typically one of Brazil's dryest months, could keep mills from harvesting all the mature cane available before they have to shut down in December due to the rainy season.

"If rains continue strong in July, it could mess things up," Mizutani said.

Brazil's center-south cane belt has been wet in recent days, but Mizutani said, so far, weather has been normal and mills have only lost a few days to wet weather. Mills tend to suspend the crushing of sugar cane during rain. (Reporting by Marcelo Teixeira; Writing by Reese Ewing; Editing by David Gregorio)