Sugarcane - Ethanol - Biodiesel Brazil

18 Mar 10

Ethanol
Low liquidity presses prices down

Brazilian ethanol prices remained the downward trend in the Sao Paulo market during the first fortnight of March. Distributors continued with low interest in purchases due to reduction of sales at the pump. Besides, consecutive drops observed in the Brazilian ethanol prices and the nearness of the new crop drove purchasers to refrain, expecting lower prices. On the other hand, some mills sold product at lower prices than those negotiated by most part of mills in the market, this was in order to make cash for payments of early month.

Overall, trades were closed at small volumes. During March 1-5, the CEPEA/ESALQ Index (Sao Paulo state) for anhydrous averaged 1.1198 real or 0.6257 dollar per liter (excluding taxes) for a decrease of 6.85 percent in relation to the previous period. The CEPEA/ESALQ Index for hydrated averaged 0.9350 real or 0.5225 dollar per liter (excluding taxes) for a drop of 6.15 percent in the same period.

In the subsequent week, during March 8-12, the CEPEA/ESALQ Index (Sao Paulo state) for anhydrous averaged 1.0026 real or 0.5651 dollar per liter (excluding taxes) for a decrease of 10.5 percent in relation to the previous period. The CEPEA/ESALQ Index for hydrated averaged 0.8271 real or 0.4662 dollar per liter (excluding taxes) for a drop of 11.5 percent in the same period.

As for exports, according to Secex (Foreign Trade Secretariat), ethanol shipments (anhydrous and hydrated) dropped 31.7 percent in February in relation to January, amounting 104 million liters exported. Comparing February 2010 and February 2009, shipments were 12 percent lower and 14.2 million liters less were exported. During the 2009/10 crop (April 2009 and February 2010), 3.1 billion liters were exported, according to Secex. (Cepea – Brazil)

Sugar
Interest in sales reduces prices

Although sugar supply is still low, Brazilian crystal sugar prices decreased over the first fortnight of March due to strong drops in the international market and nearness of the new crop. Moreover, part of mills decided to finish stocks once they cannot stop the downward trend expected to the short period. On Monday, March 15, the CEPEA/ESALQ Index (Sao Paulo state) for crystal sugar closed at 69.48 reais or 39.41 dollars per 50-kilo bag for a drop of 4.46 percent in relation to February 26. Since early January, the Index had oscillated over 70 reais.

According to Unica (Sugarcane Industry Association), during April 1, 2009, and March 1, 2010, around 535 million tons were crushed in the Central-Southern region, volume 6.4 percent superior to the same period of the 2008/09 crop (503 million tons). This period represents the total of the 2009/10 season of Center-Southern region. Sugarcane production allocated 57 percent for ethanol and 43 percent for sugar.

Sugar production reached 28.5 million tons, 6.9 percent higher in relation to the previous period (26.7 million tons). Ethanol production limited to 23.3 billion litters for a drop of 6.7 percent (25 billions litters) – 17.1 billion litters allocated for hydrated (an increase of 3.7 percent) and 6.2 billion litters allocated for anhydrous (a reduction of 26.9 percent).

Brazilian exports of raw sugar (VHP) amounted 979.97 thousand tons in February, 24 percent lower in relation to January (1.29 million), but 4.2 percent higher compared to February 2009 (940.71 thousand tons), according to Secex (Foreign Trade Secretariat). In the 2009/10 crop (during April 2009 and February 2010), shipments reached 16.94 million tons of VHP sugar, 21.3 percent superior to the total exported in this period the previous season (13.97 million tons). (Cepea – Brazil)

Brazil’s ETH and Brenco to Merge

Cosan reports net profits of R$167.1 million last quarter of 09.

Vale and Bunge: Agreement for the transport of ethanol
13 Jan 10

Two years after the federal government auctioned the North-South railroad concession, it is beginning to consolidate into a major logistics corridor of the country. Vale, which runs the railway on the stretch running from Açailândia (MA) to Palmas (TO), has signed a major agreement with the multinational Bunge to transport 200 million liters of ethanol per year to the Port of Itaqui in Maranhão.

The 11 contract should further increase the total load moved by rail in the country. Until September of last year, the Vale had carried 7% more than the whole of 2008, totaling 1.5 million tons. According to the Director of Marketing Logistics Vale, Marcello Spinelli, the agreement with Bunge will take 700 trucks a month off Brazilian highways.

The ethanol will leave the terminal of the multinational the city of Tupirama (TO) for Guaraí (TO) where it connects with the North-South Railroad. From this point, it will continue on the North-South until reaching the Carajás Railroad (also the Vale) and then on to São Luís (MA), where it will be exported through the Port of Itaqui. "The cost of transport becomes much cheaper because of the proximity to the United States, for example," said Spinelli.

Mitsui Rail Capital (MRC) will rent 25 tank cars for Bunge. All equipment will be produced in Brazil. The transport of 200 million liters will begin this year, but no date has been set.

Although the portions of the North-South remain to be completed (the track to Palmas will be completed by May), the company has managed to sign important contracts. In December, the company signed an agreement with Ceagro Agribusiness for maritime transport and shipment of 240,000 tons of grain per year.

Grains will be transported on the route Porto Franco (TO) and Colinas do Tocantins (TO) to St. Luis, MA, where it will loaded at the Vale's Ponta da Madeira. Besides Bunge and Ceagro in North-South has other clients such as Cargill, Multigrain, Algar, Iara Fertilizers and Spa Construction. "Today we are very focused on grain and fertilizer. But when we get to Palmas we also will explore the market for containers," says Spinelli.