Sugar industry in CS Brazil Hardship & Resilience

Transcrição

1 Sugar industry in CS Brazil Hardship & Resilience September 2014

2 Rapid increase in the 2000 s Stagnation/Volatility since /15 around 550mt What s next? 500mt or 600mt? Sugar cane harvested in CS Brazil (million tonnes) ? /01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 2

3 CS Brazil sugarcane crop profile: 10 % 7% 10 % 61% 7%

4 Drivers of future sugar cane production: 1- Area under cultivation 2- Agricultural yields 3- Industrial capacity All three need to withstand challenges of over-supply 4

5 Area under cultivation: Expansion Expansion rate from 9% in the 2000 s to 2-3% as fewer greenfields Harvested area in CS Brazil (million hectares) & Yearly growth (%) 8 18% 7 16% % 12% 10% 8% 6% 4% 1 2% 0 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 0% 5

6 Area under cultivation: Maintenance Renovation rate below required level as planting is costly Renovation this year around 14% Required level to maintain productivity: around 18% Mill crushing 2mt cane and producing 70% of cane supply: 20,000 hectares harvested Need to renovate 4,000 hectares per year at a cost of r$30 million Save r$6 million if renovation fall behind at 14% Impact on cane production is delayed and gradual Losses around 12mt for next crop 6

7 Agricultural yields: +70% increase since 1961 in Brazil; % 148% 137% 104% 70% 40% Wheat Rice, paddy Sugar beet Soybeans Sugar cane (World) Sugar cane (Brazil) 7

8 Agricultural yields: From near 85t/ha in the late 2000 s to 70-80t/ha in recent years Agricultural yields in CS Brazil (tonnes/hectare) t/ha /01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 8

9 Agricultural yields: Productivity losses herald structural changes Weather Major potential impact Drought cut 2014/15 production by 60mt Early stage for 2015/16 but dryness not an ideal start Crop maintenance Diminished expansion implying lower agricultural yields (smaller share of young cane) Renovation/Age of cane Field care (fertilizers, weeds and pest control) Mechanisation Learning curve on plantings & harvesting New territories Expansion to new states with different climate/soils Suitable varieties? 9

10 Mechanisation Learning curve on plantings & harvesting Impacts on ATR!! 9/15/

11 Mechanisation Learning curve on plantings & harvesting Impacts on ATR!! 9/15/

12 Focus of debate: New territories Spacial evolution of the Sugar Cane growth in the Center-South region of Brazil 2003 Canasat

13 Focus of debate: New territories Spacial evolution of the Sugar Cane growth in the Center-South region of Brazil 2013 Canasat

14 What are the implications?? 14

15 Sugar cane has evolved from a predominantly A,B environment to a more C,D environment in newer areas By definition: The ecological relationship of soil with plants, and land cultivation practices & the climate SP/Piracicaba SP/Ribeirão Preto GO/Goiás norte PR/Paraná SP/Araçatuba GO/Goiás sul A-I, B-I, C-I A-II, B-II, C-II A-III, B-III, C-III B-IV, C-IV; D-IV B-V, C-V; D-V C-I, D-I e E-I C-II, D-II e E-II C-III, D-III e E-III C-IV, D-IV, E-IV C-V, D-V, E-V Source: CTC 15

16 SucarCane areas were expanded from a predominant Edapho-climatic Environments A and B to C and D! GO/Goiás norte PR/Paraná SP/Araçatuba GO/Goiás sul B-IV, C-IV; D-IV B-V, C-V; D-V C-I, D-I e E-I C-II, D-II e E-II C-III, D-III e E-III C-IV, D-IV, E-IV C-V, D-V, E-V Source: CTC A-I, B-I, C-I A-II, B-II, C-II A-III, B-III, C-III SP/Piracicaba SP/Ribeirão Preto

17 Potential yield (tons/ha) on diffent soils production environment A1 > C1 A C2 B D1 B D2 Source: Prado (2005) Dif São Paulo 69,55% 61,54% -8,01% Paraná 9,53% 7,07% -2,46% Mato Grosso 4,80% 2,85% -1,96% Goiás 4,36% 10,39% 6,02% Minas Gerais 6,23% 10,22% 4,00% Mato Grosso do Sul 2,97% 6,95% 3,98% Outros 2,55% 0,98% -1,57% Source: UNICA

18 Crushing capacities: Uninterrupted expansion despite recent slow down 70mt of cane missing in 14/15 to reach full utilisation rate Crushing capacity (million tonnes) and Utilisation rate (%) % % % % % % 0 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 70% 18

19 Crushing capacities: Financial hardship and mill closure Mills closure Financial difficulties led to Recuperacao Judicial and, in some cases, closure Over past few years, around 60 mills closed, with a total capacity of 60mt So far, closures did not lead to decrease in total crushing capacity Risks for next crop NY#11 in BRL Vs Production costs Low sugar prices, strong currency, cane losses, inflation, absence of progress on ethanol.difficult times for the industry How many more mills will close before next season starts? Will crushing capacity decrease for the 1 st time? BRL/lb Impact of decreasing crop forecast on production costs SBK4 SBN4 SBV4 SBH5 exc. Finance inc. Finance 19

20 What s next? Despite going through hardship, Brazil capacity to recover should not be underestimated 2015/16: likely rebound, weather permitting Sucden forecast for CS Brazil 2008/ / / / / / / /16 Cane crushed mt ATR kg/t 140,1 129,6 140,5 137,5 135,6 133,3 134,3 135,0 a Total sucrose mt 70,8 70,2 78,3 67,8 72,2 79,4 73,7 78,6 Sugar ratio % 39,7% 42,8% 44,9% 48,4% 49,5% 45,2% 43,9% 45,0% Sugar production mt 26,8 28,6 33,5 31,3 34,1 34,2 30,9 33,7, Ethanol production mm3 25,1 23,7 25,4 20,5 21,4 25,4 24,2 25,3 Mid-term: further consolidation, and recovery subject to eventual price rebound 20

21 THANK YOU! 21