Brazil mills boost sugar capacity as much as 10%
Brazil cane mills will boost their sugar production capacity as much as 10% in the new season from April to take advantage of relatively high sugar prices and as increasing supplies of corn make the grain a cheap feedstock for ethanol output.
It is reported by Reuters.
Brazil is the world's largest sugar producer. It accounted for nearly 50% of global sugar trade last year as unfavorable weather due to the El Nino climate pattern reduced output and exports from competitors India and Thailand.
Sugar prices have dipped from a 12-year peak hit in November, but are still historically high. Brazilian mills are rushing to complete expansions or new plants to boost their sugar production capacity, analysts said.
«Every mill that can do it (boost sugar capacity), is doing it, — said Julio Maria Borges, a director and partner at JOB Economia e Planejamento, an advisory firm. — The difference on financial returns between sugar and ethanol is just too big».
Sugar prices are currently 60% higher than Brazilian ethanol prices, broker and supply chain services provider Czarnikow said in a report this week. It is the widest price gap in 15 years.
Among some of the largest sugar investments are Jalles Machado's, opens new tab 170 million reais ($34.19 million) plant in Minas Gerais state, Cerradinho Bionergia's 289 million reais ($58.56 million) factory in Mato Grosso do Sul and Coruripe's 200 million reais ($40.5 million) new sugar production line also in Minas Gerais.
France's Tereos, which has seven plants in Brazil, plans to allocate 70% of its sugarcane for sugar production, and 30% to ethanol. That is a boost from the already high level of 67% last season.