By Roberto Samora
SAO PAULO, July 1 (Reuters) – French meals group Tereos believes the worldwide sugar market has not totally priced the manufacturing issues in prime sugar maker Brazil, seeing room for costs to go even increased, in accordance with the top of the group’s unit in Brazil.
Pierre Santoul instructed Reuters the Brazilian operation is anticipated to crush 10% much less sugar cane within the 2021/22 season that began in April than within the earlier yr, because of drier-than-normal climate within the final months.
“It’s important, sadly the drought is a vital occasion,” he mentioned.
Tereos is the second largest sugar producer in Brazil and in addition the second largest on the earth, solely behind Raizen, the three way partnership between Cosan SA CSAN3.SA and Royal Dutch Shell Plc RDSa.L.
It processed 20.9 million tonnes of cane in Brazil final season, allocating 62% of that cane to supply 1.eight million tonnes of sugar. The corporate sees a barely increased allocation for sugar within the present season at 63%.
Regardless of the expectation of a 10% fall on cane crushing, Tereos says it has hedged sugar gross sales this yr at costs 13% increased than the typical final yr, so the end result will greater than offset the losses to the drought.
Sugar costs hit a four-year excessive this yr because of manufacturing issues in Brazil and different nations. Frosts this week are seen including to the drought losses.
Tereos issued 480 million reais ($95.21 million) in native inexperienced bonds on Wednesday to finance investments in cane fields.
“It’s the largest a part of our capex (plantings). Now we have a robust give attention to the great agricultural practices, on utilizing the very best cane varieties,” Santoul mentioned.
($1 = 5.0417 reais)
(Reporting by Roberto Samora, writing by Marcelo Teixeira; modifying by David Evans)
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