Nestor Rabello and Reese Ewing – Reuters, 2/2/2015
Brazil’s struggling sugar and ethanol mills got more good news on Monday after the government granted an expected increase in the national blend of the biofuel in gasoline to 27 percent on Feb. 15 from the current 25 percent, industry officials said.
The higher blend is the latest of several measures taken by the government expected to have a positive effect on the industry’s bottom line going forward.
In the past years, local firms such as Raizen , Biosev, Bunge, Sao Martinho and Guarani have struggled to post consistent and robust profits as rising production costs combined with government gasoline subsidies have squeezed mills’ margins.
Leslie Josephs – The Australian Business Review, 11/13/2014
The sugar market gave investors a buzz yesterday, when news of a surprisingly sharp decline in Brazilian production sent prices to their biggest percentage gain in more than six weeks.
The report, by a Brazilian trade group, rattled investors who had made large bets that sugar prices would decline amid a global glut. Those bets largely hinge on a bumper Brazilian harvest flooding the market with supply. The country produces about a fifth of the world’s sugar.
Brazil’s main sugar growing region experienced its worst drought in decades earlier this year, hurting the development of sugar cane, and dozens of mills closed for the year because of poor weather and low prices, reducing Brazil’s output. But yesterday’s report was even weaker than expected.
Brianna Lee – International Business Times, 10/13/2014
A deepening drought crisis across Brazil is hitting two of the country’s largest exports as coffee prices surged to their highest level in two years and sugar production is headed for a steep decline. The drought affecting Brazil this year is the worst the country has faced in decades, triggering alarm for cities like Sao Paulo, which has instituted emergency measures to cope with a water supply crisis.
The price of Arabica coffee, of which Brazil is the world’s top supplier, soared to a two-year high last week as meteorologists predicted low prospects for rainfall in Brazil’s coffee-producing regions for the rest of October and November.
Brazil joins other Central American countries dealing with coffee crop woes as El Salvador, Honduras, Panama and Guatemala have all dealt not only with drought but also coffee rust, a fungus that hit crops and resulted in the loss of more than $1 billion since 2011. Meanwhile, however, Colombian coffee seems to be taking advantage of the situation. Colombia’s coffee output looks set to reach a 20-year high this year.
Isis Almeida – Bloomberg, 02/14/2013
Sugar may need to drop further to spur millers in Brazil, the world’s largest producer, to make more ethanol at the expense of the sweetener when the 2013-14 season starts there in April, according to Macquarie Group Ltd.
Futures traded on ICE Futures U.S. in New York, down 7.6 percent this year, may need to average 17 cents to 18 cents a pound when sugar cane processing starts in the center south, Brazil’s main growing region, Kona Haque, an analyst at the bank in London, wrote in a report e-mailed today. Sugar for May delivery was down 1 percent at 18.02 cents a pound.
Millers in Brazil use raw material sugar cane to make both the sweetener and the biofuel. The price of hydrous ethanol, the 100 percent biofuel used in Brazil’s flex-fuel cars, climbed above that of sugar on Feb. 7 for the first time since April 2011, according to Kingsman SA, owned by McGraw-Hill Cos. That spurred speculation millers would make more of the biofuel.
The cane crush is in full swing in the center-south, the main sugar producing region of Brazil, the world’s top sugar exporting country. Despite forecasts by several venerable analysts for a major sugar surplus due to hit the market in the second half of 2012, futures prices for the sweetener are up 22 percent since the start of June.
“Brazilian mills are worried about the spring rains and are trying to maximise the crush,” said Jonathan Kingsman, head of the Lausanne-based sugar and ethanol consultancy Kingsman SA.
Spring rains typically arrive in the cane belt around October-November and intensify through February. Heavy rainfall in May, June and early July delayed harvesting and, combined with adverse weather in other leading producers, contributed to a rally of raw sugar futures prices to three-month highs this week. Dealers also talked of disappointing yields.
Lucia Kassai – Bloomberg, 10/10/2011
Sugar mills in Brazil’s Sao Paulo state, which accounts for more than half the nation’s cane output, started shutting for the season in late September, the earliest in 12 years, because of a smaller crop.
Mills began shutting down about 30 to 40 days earlier than expected when the harvest started in April as domestic output this year falls for the first time in six years, Celso Junqueira Franco, president of the Union of Biofuel Producers, known as Udop, said today in a telephone interview from Ribeirao Preto, Brazil.
“This is a very early end of the season,” Junqueira said. “Most mills will shut down by the end of this month.”