BRAZIL: Copersucar sees mills focusing more on ethanol next season
Published: 11/06/2017, 3:35:37 PM
Brazil's Copersucar, the world's largest sugar merchant, expects the country's centre-south mills to increase ethanol production next season to take advantage of higher demand and prices for the biofuel, said Chairman Luis Roberto Pogetti, according to Reuters.
Speaking on the sidelines of a conference in Sao Paulo, Pogetti said changes in the production mix in the current sugar cane crop were modest due to mills' previous commitments, but there was a greater chance of larger adjustments in favor of ethanol later.
"Next year, considering the outlook for better returns for ethanol, mills are likely to explore their production flexibility to produce more ethanol," Pogetti said.
Gasoline prices have jumped 20% in Brazil since July due to higher oil prices and effects of hurricanes in the United States. As a result, ethanol demand grew in Brazil as the biofuel's price advantage over gasoline increased. Mills were able to improve margins on ethanol sales, fetching better returns than with sugar exports.
Copersucar trades sugar and ethanol on behalf of more than 20 associated companies in Brazil. It is also a partner of Cargill Inc in the Alvean joint venture, which controls about 25% of the global sugar trade.
The current cane harvest in Brazil's center-south is about to end, with mills expected to crush nearly 580 million tonnes. Most analysts see no significant change in the amount of cane to be processed in the next season, which starts in April.
Despite expectations that a larger amount of cane will go to ethanol production next year, Pogetti said he did not expect big swings in the sugar market.
"It is going to be 1 billion liters (of ethanol) more, or so," he said. "It may spur some nervousness in the sugar market, but I don't see it as relevant."
Sugar market participants from around the world are expected in Sao Paulo this week for several industry events that will culminate with the Sugar Dinner on Thursday.
Pogetti said he had scheduled meetings with many sugar and ethanol buyers for the next days as the market tries to gauge prospects for Brazil's production in 2018/19.
One possible major change in Brazil would be the RenovaBio program, a government-sponsored plan to boost ethanol and biodiesel use in the country.
But the program, once seen as certain, has yet to take effect.
Pogetti said there was a consensus within the government about RenovaBio, and he expects the program to start soon.