Ag Sector

Ethanol - Sugarcane

** This subject was brought to the attention of my Newsletter readers in previous issues.

Brazil runs the risk of becoming an importer of ethanol
 

In the first half of 2011, 406.9 million liters of fuel have already entered the country, more than double the total imports between 2000 and 2009. Experts warn that without new investment, deficit can be expanded in coming years
 

Published 2 Aug 2011 | LUANA GOMES
Gazeta do Povo

The lack of investment in the sugarcane industry is moving Brazil to become an importer of ethanol. To avoid shortages during the offseason at the beginning of next year, the country will seek about 650 million liters overseas increasing by nine time the volume imported in 2010 (75.6 million liters ). Experts warn that the imbalance between supply and demand, which has been occurring since last year, tends to make it a trade balance deficit product in the coming years.

From January to June this year, 406.9 million liters of fuel entered the country, more than double the total imports between 2000 and 2009, according to the Foreign Trade Secretariat (Secex). Mills, trading companies and distributors have already signed contracts for another 250 million liters. According to information from Bioagência, a company that negotiates the production of 26 mills in the Center-South and holds 8% of the domestic market, the loads due to start arriving to ports in Brazil between the end of this month and early September.

"Continued importing of ethanol in the coming years is very high," warns the director of the company, Tarcila Rodrigues.

The problem is structural and has its origins in 2006, when a poorly planned expansion caused oversupply, depressing prices of sugar and ethanol, causing difficulties for plants to pay off debts. In 2008, when the situation was normalizing, the industry was surprised by the international crisis that dried up credit and forced companies to shelve investment projects.

"Since then, we have no longer been able renew our fields. As a result, productivity fell from 95 to 76 tons per hectare and ATR (sugar quaility in raw sugar) also decreased.", says the representative of the Union of Sugarcane Industries (UNICA) in Ribeirão Preto (SP ), Sergio Prado. He points out that the problem was aggravated by excessive rains in 2009, a drought in 2010 and frosts this year.

Unica calculates that industries of South-Central region of the country - which represent about 90% of Brazil's production - will have available for milling 533.5 million tons of sugarcane, 4.2% less than last seasons' 556,940,000 tons. It is the first decline since the advent of flex cars in 2003. Some believe that the tight supply of sugarcane will be even greater. "The market believes that we will reach a maximum of 515 million tons," says Arnaldo Correa, risk manager of the Archer Consulting.

Whatever the final number, results will mean the lower production of ethanol. Even considering a conservative projection of Unica, there will be a deficit in supply of fuel, which should decrease to 22.5 billion liters for an estimated consumption of 2 million liters / month, or 24 billion liters / year. "Imports resolved the problem temporarily, but did in the medium or long term", said Correa.

The the ethanol market will begin to emerge from the crisis only after the sugarcane fields have been replanted. "What we need today are not new plants, but new crops," says Prado. According to the government, the Brazilian sugar and ethanol industry is now working with 20% of its production capacity idle. If there were available raw material, could grind 150 million additional tons of sugar cane.

"I have visited several producing regions in São Paulo in recent weeks and saw that the replanting of aging areas is occurring," says the representative of Unica. "The problem is that these new areas will only come into production in 18 months and until then, supply will remain tight."

Ag News: Sugarcane-Ethanol

11 Jan

Brazil imports a record 1.1 billion liters of U.S. ethanol in 2011

Lower production of ethanol led to increased imports of fuel

Brazil imported 1.1 billion liters of U.S. ethanol in 2011, according to data from the Bureau of Foreign Trade (Secex). The volume is a record and much higher than the imported 74.084 million liters in 2010.

According to Secex, ethanol imports from the United States accounted for 96.7% of the total imported by Brazil in 2011, which reached close to 1.14 billion liters. In December, the import was a record for a single month, reaching 279.71 million liters compared to 152.2 million liters in November and 132.32 million in October.

Exports were mainly carried out via the Northeast, which guarantees the smallest margin for freight operation. The lower ethanol production in 2011/12 has led to increased imports of the product. The exports of the product fell 54.7% to 1.96 billion liters, according to Secex. Since ethanol exports to the United States rose from 313.4 million liters in 2010 to 663.925 million liters.

This increase was driven by premiums paid by the United States for ethanol advanced category in which the ethanol from sugar cane is included for having reduced emissions. With the premium paid for the product in Brazil, Brazil can export and import ethanol from sugar cane ethanol from corn, and even win a prize in the operation.

In 2012, it is expected that exports to the United States can grow even more with the removal of the import tariff on 31 December 2011.

30 Dec

Brazil, Short Of Biofuel, Can't Open Spigot To US

For three decades, the U.S. government sought to protect American corn farmers and ethanol makers from a feared flood of Brazilian imports by imposing a tariff that had the South American country crying foul.

click here for full article

27 Dec

For Unica, Executive Order will facilitate interim storage of ethanol in 2012/2013 crop

The Executive Order leaves room for mills to start the 2012/2013 season and with credit rules to retain the fuel when the supply is high.

The Industry Union of Sugar Cane Association (UNICA) welcomed the official publication on 26 December of the provisional measure (MP), which clarifies interest rates and authorizes the creation of lines of credit for ethanol storage, which will enable mills to start the 2012/2013 season and with credit rules to retain the fuel when the supply is high, which would help stabilize the price of ethanol.

Through the communication board, the only regret, however, that the measure has been announced in the period between when the stocks of ethanol are reduced. However, it ruled out the use of future resources to finance the storage of anhydrous ethanol mixed with gasoline by 20%, before the next harvest.

This is because the Unica estimates that the reduction in the mixture of 25% to 20%, started in October, can generate an excess of anhydrous during the off-season. The rules of the Executive Order on interest rates and the value for the financing of storage is still to be determined by the National Monetary Council (CMN) in January.

23 Dec

Deal wave continues with Brazil cane energy tie-up

The late-year spurt in agribusiness deals continued even as many investors were packing up for Christmas, as Brazilian sugar and ethanol group Tonon Bioenergia revealed an asset sale to raise cash for beefing up mill capacity.

14 Dec

Mill owners want lower taxes on ethanol


Considered a disastrous harvest by industry experts, the president of the Union of Sugarcane Industries (UNICA), Marcos Jank, said it was necessary to give competitiveness to Brazilian ethanol. The most important measure, to the representative of the owners, is the tax exemption for ethanol, especially the Social Integration Program (PIS) and Contribution to Social Security Financing (Cofins). Today, the mills pay 9.25% for PIS / Confins. "We are estimating that by 2020, we will produce 1.2 billion tons of sugarcane and 40% of that will go to ethanol production. And the big question is competitiveness. The most important is the reduction of taxes that are levied on ethanol", Jank said.

He said ethanol should be treated the same as gasoline, which favored by the reduction of the Contribution for Intervention in Economic Domain (Cide). "We understand that ethanol has to go through the same process",  he said. According to Jank, states could also reduce the tax on Goods and Services (ICMS), as well as in São Paulo, which fell from 25% to 12.5% tax rate.

The balance of the sector until November, shows that the grinding of the sugarcane fell by 10.23% over the volume processed in the same period in 2010. In the second half of November, 9.11 million tons were milled, less than half of which was processed in the same period last season.

The productivity of sugarcane in the 2011/2012 agricultural period was the lowest in 24 seasons, said Luiz Antonio Dias Paes, Product Manager of the Center for Sugarcane Technology (CTC). Consequence of the weather - with the occurrence of prolonged droughts and frosts in winter - and a lower renewal of sugarcane, a result of the economic crisis.

By 2020, the mills is expected to double the production of 555 million tons to 1.2 billion tons. To achieve this result, Unica's technical director, Antonio de Padua Rodrigues, estimates that 120 new plants will be needed. "We must produce more sugar cane to meet every market that we have and, therefore, we need public policies and private too."
source: l

2 Dec

Smaller crop increases prices and reduces demand

In this season, ethanol prices are high in the spot market. Considering the monthly CEPEA/ESALQ Indexes for anhydrous (São Paulo state), from April (when the crop started) until October, the average is 1.5054 real per liter, 44% higher than the same period of 2010. For hydrous, the average is 1.195 real per liter, an increase of 33%. This scenario has been pushing down the demand for ethanol in Brazil.

According to data from ANP (National Agency of Petroleum, Natural Gas and Biofuels), from January to August 2011, 12.919 billion liters of ethanol were sold (7.262 of hydrous and 5.658 of anhydrous) in Brazil, a decrease of 1.5 billion liters if compared with the same period of 2010. Exports have been following the same tendency. Regarding to Secex (Foreign Trade Secretariat), from April to October, 1.188 billion liters were shipped, 2.22% lower than the same period in 2010.

Over the first week of November, in São Paulo state, the firm demand pushed up hydrous prices. Besides, a growing number of mills from São Paulo state have been wrapping up the season, which is influencing prices. For anhydrous, values have remained stable in that period – in general terms, supply was balanced with demand. Some trades involved a large volume of hydrous and anhydrous, but some distributors stayed out of the market.

At the beginning of the second week of November, distributors were willing to trade the hydrous ethanol. On the following days, however, trades involving this type of ethanol backed up to normal. The volume of the anhydrous ethanol traded, on the other hand, was much lower than that in the previous week. As for supply, some mills were willing to trade only to make cash flow to cover beginning-of-the-month liabilities, but they had little pressure on the quotes.

Between Nov. 07-11, the weekly CEPEA/ESALQ Index for hydrous increased 0.78%, closing at 1,2725 real or 0.7261 dollar per liter. The CEPEA/ESALQ Index for anhydrous averaged 1.3817 real or 0.7884 dollar per liter, upping only 0.21%. Price quotes do not include taxes.

In the price parity calculated by Cepea, crystal sugar remunerated 38% more than the anhydrous ethanol between Nov. 07-11 in São Paulo state. For hydrous ethanol, the sugar advantage was 48%. Comparing the two types of ethanol, anhydrous remunerated 2% more in the same period.

The average anhydrous ethanol price equivalent to crystal sugar was calculated at 1.9011 real per liter (no taxes included) between Nov. 07-11 in the São Paulo market. To be equivalent to crystal, hydrous should have reached 1.8104 real per liter, and to be equivalent to anhydrous, 1.3034 real per liter – no taxes included in all price quotes.

Unica (Sugarcane Industry Association – Brazil) reported that 23 million tons of sugarcane were crushed in the second fortnight of October, producing 1.472 million tons of sugar and 961.7 million liters of ethanol (397.7 million liters of anhydrous and 564 million liters of hydrous).

In the accumulated of the season, 459.6 million tons were crushed, and 29.2 million tons of sugar and 19.166 billion liters of ethanol (7.488 billion liters of anhydrous and 11.678 billion liters of hydrous) were produced. In this period, 48.42% of the sugarcane was allocated to sugar and 51.58%, to ethanol production.

Regarding Brazilian ethanol exports (hydrous and anhydrous), 247 million liters were shipped in October, according to Secex, for an increase of 41.7% in relation to September 2011. Compared to the October 2010, when 212.8 million liters were shipped, exports moved up 16.1%. The volume exported in October 2011 was the second largest of the 2011/12 crop.
source:

1 Dec

Projections for Sugarcane are positive

The expectation is that more than 90 000 people will be brought intothe labor market by sugarcane industry in Tocantins, which is already well known nationally for producing grain and livestock.  The bioenergy sector began 2011 with the opening of the Bunge plant at Pedro Afonso to produce sugarcane and bioenergy,  The company, which has a grinding capacity of 2.5 million tons of sugarcane, opened the doors for the sector of Tocantins. Now experts design new investments for 2012.

According to the Clean Energy Undersecretary of Agriculture, Livestock and Agricultural Development, Parente Ailton Araujo, Tocantins has the capacity to deploy 24 ethanol plants and the expectation is that other national and multinational companies recognize the great potential for investment in the state. Long-term estimates are that 1.2 million hectares could be cultivated with sugarcane in the State.

To attract investors, Ailton Araujo ensures that the large amount of available land and high productivity utilizing irrigation systems.  "In Tocantins, rescue irrigation, used only during the dry season, productivity is 90 tons per hectare. In Sao Paulo, the average productivity is 78 tons per hectare, "said Undersecretary of Clean Energy.

Symposium
To stimulate new investment, Seagram will hold,  between 08th and 09th December, Tocantinense Symposium on the Culture of Sugarcane at the COAP headquarters( Cooperativa Agroindustrial of Tocantins), in Pedro Afonso. One hundred and eighty people have signed up for the event, even from other states. The goal is to support, through various lectures, small, medium and large producers interested in producing sugarcane.

Seagro / TO

27 Oct

Production capacity more than double current demand

• Biodiesel producers want gov't to double mandatory blend

• Gov't unwilling for now, incremental increases possible

By Roberto Samora

SAO PAULO, Oct 27 (Reuters) - Producers in Brazil's fast-expanding biodiesel sector are lobbying the government to raise the mandatory blend of the renewable fuel in regular diesel as production capacity far overshoots demand.

click here for full article

27 Oct

Pilot plant To accelerate the arrival of cellulosic ethanol in Brazil
 

Ethanol 2nd generation: technology can increase productivity by 40% ethanol.

The first plant to be installed in Brazil to produce ethanol from cellulose, the so-called second generation ethanol, should come into operation in 2013. The project, estimated at USD $ 75 million, is the result of a partnership between the Brazilian and GraalBio Chemtex, a company that is part of the Italian group Mossi & Ghisolfi (M & G).

Alfred Szwarc, a consultant and Emissions Technology Industry Union Cane Association (UNICA), the news announced in early October is peculiar because it can accelerate a long-awaited process: the production of cellulosic ethanol from bagasse and straw cane sugar. In this system, enzymes are used to convert cellulose into sugars, which then undergo fermentation and are converted into ethanol.

"If the projections of production of ethanol from biomass use are realized, the country may be one of the first in the world to operate this type of technology on a commercial scale," notes the consultant's UNICA.

According to Szwarc, this type of technology can increase the average productivity of a conventional ethanol production unit by 30 to 40%, depending on the availability of raw materials, bagasse from sugar cane. The potential grows as the straw of cane sugar is replaced by bagasse as boiler fuel. However, the consultant UNICA points out that the cost is still concerned about the sector, something that M & G and the Grail is said to have resolved.

M & G says they have invested US$ 200 million since 2006 on a project called Proesa, designed to extract biofuel from sugar cane bagasse. According to the CEO of Chemtex and vice president of M & G, Guido Ghisolfi, ethanol produced will be sold at a price lower than sugarcane ethanol produced in Brazil - between R$ 1.65 and R$ 1.78 liter (considering the value of the dollar 24 Oct 11).

The Partnership

The GraalBio is one of five companies created by the Graal family, former shareholders of the Odebrecht group. All intend to work in areas related to innovation, focusing on acquisitions and associations to companies holding technology, such as the Italian M & G. According to the director of the Brazilian company, the interest in second generation ethanol was born due to the great potential of the product in both the national and the international market. "I'm willing to take a risk that other technology companies are not willing to face," highlights Bernardo Gradin.

As for the CEO of M & G, Guido Ghisolfi, according to the Graal is a good opportunity to expand business in Brazil. "For us, according to Graal, is a great way to launch our technology in Brazilian lands and develop their potential," he said.

source: Unica

21 Oct

Brazil’s Cheap Energy Stymies Cane Investments, Bradesco Says
 

Falling electricity prices in Brazil are hindering investments in new sugar-cane mills, an analyst at Banco Bradesco SA said.

Prices of energy sold during the last government-organized auction for new power capacity fell to about 100 reais ($56.22) a megawatt-hour, from 144 reais in August 2010, Bruno Varella, an analyst at Osasco, Brazil-based Banco Bradesco, said today in a telephone interview. That’s about a third less than companies need to build the power plants that typically run cane mills, he said.
 

click here for full article

12 Oct

Cane milling drops by 7.4%
 

Up until October 1, 412 million tons were processed in the Mid-South, the main sugarcane farming region in Brazil. Sugar production declined by 4.2% and ethanol production decreased by 16.4%.
 

click here for full article
 

source: via Agência de Notícias Brasil Árabe

29 Sept

Codexis, Raizen to Develop First Generation Ethanol
 

Codexis, Inc. (Nasdaq: CDXS) and Raizen Energia S.A. today announced the signing of a joint development agreement to develop an improved first generation ethanol process with enhanced performance economics. Raizen is Brazil's largest sugar and ethanol producer.
 

click here for full article

28 Sept

Petrobras has US$ 300 million for biofuel industry

Investment should focus mainly on sector research and technology development
 
The manager of technology management Petrobras Biofuel, John Noschang Norberto Neto, said on Wednesday, Oct. 28, the investments of Petrobras in the sector of research and technology development for biofuels will be around US$ 300 million, according to the Business Plan  2011-2015. The information was given during a presentation at the "World Biofuels Markets Brazil", held in São Paulo, according to a spokesperson for the state.

The manager emphasized that investment in technology for biofuel made by the state has three priorities: the development of second generation ethanol, cellulosic ethanol - a research project that uses sugarcane bagasse and has the prospect of 30% increase in ethanol production without increasing the area planted, the continuation of research to produce bioQAV due to growing global demand and the development of technologies that generate higher environmental quality of the production process of biodiesel and ethanol from Petrobras.

The event, organized by Green Power Conferences, convened the value chain in Brazil, the United States and the European Union, including producers, refiners, technology providers, financial, utilities, major oil producers and government representatives to discuss the future of the biofuels market.

20 Sept

Cargill JV aims to double Brazil sugar crush

By Caroline Henshaw
LONDON (MarketWatch) -- U.S.-based agricultural giant Cargill Inc. said Monday it plans to double its Brazilian cane crushing capacity before 2020 through a joint venture with local sugar and ethanol producer Grupo USJ.

SJC Bioenergia, (Grupo USJ) the new company formed through the 50-50 partnership, currently has the capacity to crush 5 million metric tons of cane to produce 170 million liters of ethanol and 420,000 tons of sugar every harvest. 

14 Sept

BP expands Brazil ethanol operations

• BP buys out remaining shares in Tropical BioEnergia

• Oil major also ups stake in ethanol/sugar maker CNAA

• Two deals total around $96 million in cash

click here for full article

13 Sept

Lower yield of sugarcane plants reduces revenues

The market estimates a drop in the 2011/2012 sugarcane crop of about 20% and a marked increase in costs

The good prices for sugar and ethanol, higher than previous harvest, should not offset the steady production losses faced by sugar and ethanol industries in the Central-South region of the country during the current cycle.  The market estimates a fall in the cane crop of about 20% and marked increase in costs, which are no longer low. The fact is that the current crop, which had promised high return, will instead should modest gains for the cash segment.

Risk management consulting Archer Consulting estimates losses this current harvest of around R$ 10 billion from the sale of sugar and ethanol in the Central-South. The figure represents about 14% of gross revenues initially expected by the consultancy for the region (R$ 80 billion). Archer considers in its calculations freight and port costs.

Nonetheless, revenues will increase in the region, which represent 90% of sugar cane processed in the country. The Union of Sugarcane Industries (UNICA) predicts net earnings of the mills - free of taxes, freight and other logistics costs - will be R$ 55.7 billion in the current cycle, 7.5% higher than the R$ 51.8 billion recorded last year. "We do not know exactly how much revenue this would be if the harvest had not been down. After all, prices would be different," said Antonio de Padua Rodrigues, technical director of Unica.

Archer Consulting estimates that the mills will not produce, nor sell, 4.9 million tons of sugar, 14% of the originally estimated harvest of 34,960,000 tons. The calculations also consider that no longer produced 3.3 billion liters of ethanol, compared with the initial forecast for the season. The cane crushing, the researchers claim, will be 485 million tons, 14.15% lower than the originally planned 565 million tons.

UNICA's  biweekly survey of sugarcane processing is down by 11.05% as of 1 September. The fall in sugar production is down 9.40% and ethanol 18%.

Lower than expected revenues will be seen even with higher prices, reiterates Luiz Arnaldo Correa, of Archer. The price of a liter of hydrated, for example, is 43% more than the same period in 2010, according to the Cepea / Esalq. The price of sugar on the New York Stock Exchange is 27% higher.

Meanwhile, market sources estimate that production costs rose substantially to levels already approaching 25% higher than in the previous cycle. "If we consider the financial cost, hydrated causes losses to plants." said Correa.

UNICA's Director explains that it is difficult to generalize the cost of production numbers, but acknowledges that they have risen and will translate in poor results for companies in the sector. He reckons that if the fall in the harvest is between 17% and 18%, the increase in cost will counteract the effect of higher prices.

Correa notes three factors that will influence the sector's profitability in this cycle. The first is the familiar limit of high prices for hydrous ethanol, which regardless of the size of sugarcane production, runs up against gasoline prices. There is also the case of anhydrous, which had reduced its blend in gasoline by government, which also will contain the price valuation.

The third factor will come from the renegotiation of contracts for future delivery of sugar, which promises to bring significant discounts to the values be received by the plants. "If industry has a contract to deliver the sugar in October at 29¢ per pound, but will not have product, you have to renegotiate, for example, in October 2012 to a future value, which is smaller," says Correa .

There are also cases of plants that received advanced funds and will have to renegotiation with interest charges, says Correa. "There is no doubt that problems will come."

In addition to a more modest income, the 2011/12 harvest will also terminate early. UNICA'S forecast is that beginning in October there will some plants shutting down, when normally mill closings come in early December. "Most will close their mills in the first half of November," said Padua.

In the case of sugarcane growers, many have already finished the harvest, reports the United Planters' Sugar-Sugar-South Center (Orplana). "Production could drop more than 20%. In the 2010/11 cycle, production was 125 million tons. This harvest will be less than 100 million tons," says Ismael Perina, president of Orplana.

source: Notícias Agrícolas via AgroCIM

02 Sept

Creation of the largest ethanol mill in the world shows confidence in the future
 

The movement of large groups of the sugarcane industry to increase the grinding of sugar cane and ethanol production and sugar is something that should be carefully noted.

For Marcos Jank, president of Industry Union Cane (UNICA), the investment of R$ 520 million announced on August 18 by Nova Fronteira Bioenergia, a joint venture between Grupo São Martinho and Petrobras Biofuel, is a clear sign of the confidence in the future that permeates the industry.

"It is a very timely and significant contribution that will transform the Usina Boa Vista, in Quirinópolis (GO), the largest unit dedicated exclusively to the production of ethanol from sugarcane in the world," Jank said, noting the news arrives at the same time that other companies such as Bunge and Guarani, are also announcing new projects.

"The sugarcane industry has already shown what it had the capacity to build more than 100 new plants between 2003 and 2008. We have to regain this pace of growth of before the global crisis of 2008 to meet the demand for ethanol, which grows quickly in and out of Brazil, "recalled Jank.

"The investments are essential to boost our production capacity and thus increase the supply of ethanol in the marketplace," said Fabio Venturelli, president of Nova Fronteira Bioenergia. The president of Petrobras Biofuel, Miguel Rossetto, "this great project should mark the beginning of a new cycle of investment in ethanol production for the country."

With the expansion, which should be completed in the 2014/2015 season, Usina Boa Vista, which now processes 2 million tons of sugarcane, will grind 8 million tons per year, produce annually 700 million liters of ethanol, generate 600,000 MWh of electricity and about three thousand jobs, both direct and indirect.

source: UNICA

30 Aug

Brazil hopes for bigger cane crop in 2012

Brazil's weather-ravaged sugar cane crop could rebound next year, helping the country begin to revive lagging ethanol production, an agriculture official said on Tuesday, but raising output to a comfortable level will take time and effort.  (click for full article)

26 Aug

Sugarcane Milling Down First 15 Days in South-Central Region
 

The South-Central region of the country produced 38.53 million tons in the first half of August 4.22% lower than for the same period the previous harvest. Comparing the volume processed in the last 15 days of July this year (41.60 million tons), the decrease was 7.36%.

Since the beginning of the current crop in early April until 16 August, grinding has reached 297.6 million tons, lower by 40.49 million tons (13.5%) compared to that produced during the same period of previous harvest.

source: UNICA

19 Aug

Bunge to invest $2.5bn in Brazilian cane - Financial Times

11 Aug

New revision estimates 2011/2012 harvest will be 510.24 million tons in South-Central Brazil 

The Brazilian Sugarcane Industry Association (UNICA), in partnership with the Sugarcane Technology Center (CTC), other unions and associations of the South-Central region of Brazil, revised the crushing estimates for the 2011/2012 harvest released on July 2011. The new forecast estimates a crushing of 510.24 million tons, a reduction of 4.36% in comparison to the last revision (533.50 million tons) and a total reduction of 8.39% over the final value of the 2010/2011 harvest (556.95 million tons).
 

click here for full article

9 Aug

Brazil Ecodiesel Buys Vanguarda For R$ 1.1 billion
Update: official name is now Vanguarda Agro (10 oct 11)

By Roberto Samora / Reuters

The Board of Brazil Ecodiesel approved the merger of the company Vanguarda Holdings for R$ 1.1 billion in stock in a deal creating one of the largest agribusiness companies in Brazil.

The transaction, which must be approved by shareholders of both companies, will further diversify the business of producing Biofuel, which would gain more than 200,000 hectares of land cultivated by Vanguard.

Last year, Brazil Ecodiesel made a similar acquisition, the assets of Agroindustrial Maeda, also a large agricultural producer with over 80,000 hectares and with participation in a producing ethanol and sugar.

"Given the similar nature of the companies, acting in agricultural and agro-industrial sector, the merger represents an opportunity to obtain significant synergy gains and continue to expand our participation in the development of agribusiness in the country," said company President, Jose Carlos Aguilera.

Brazil Ecodiesel provides the primary benefits of the business, reducing dependence on biodiesel, increased capacity and processing plant assets, flexibility in the sale of grain, and reducing exposure to climate risks in the portfolio of land distributed in Mato Grosso, Goiás, Bahia and Piauí.
 

* Vanguarda's base is Nova Mutum, MT

source: Brasil Econômico

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