Biofuels

Brazil sugar mills cancel export contracts on low prices

Friday, May 18, 2018

Brazilian mills have canceled up to 500,000 tons of sugar export contracts as global prices fall and ethanol grows increasingly attractive, analysts said on Monday.

Companies have canceled between 400,000 and 500,000 tonnes in contracts for the 2018/19 harvest, or equivalent to about 2% of potential shipments for the crop cycle, Arnaldo Luiz Correa, director of Archer Consulting, said in an interview.

Brazil, the world's largest producer and exporter of sugar with more than 20 million tonnes in sales per year stands to lose market share as current price levels make it unprofitable for most mills.

In 2018 alone, the benchmark contract for raw sugar on the New York Stock Exchange has declined 26% in value, trading near a two-and-a-half year low.

Meanwhile, hydrous ethanol, which can be a substitute for gasoline in most cars in Brazil, has grown more attractive. Its price advantage over the fossil fuel has widened thanks to pricing policy changes at state-owned Petroleo Brasileiro SA and higher gasoline taxes.

Sales of the biofuel at the pump increased 36% in the first quarter, according to industry regulator ANP. Reuters, José Roberto Gomes



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