The covid-19 pandemic and the drop in oil prices, due to the dispute between Saudi Arabia and Russia, are currently directing the initial axis of the 2020/21 sugarcane harvest towards the production of the sweetener. This was the diagnosis presented by specialists, during the webinar “DATAGRO: Sugar and Ethanol: Price and Consumption Shock in Times of Covid-19”, held this Wednesday (08). The online event was attended by speakers Paulo Roberto Garcia, Partner at Vital Commodities; Jeremy Austin, Managing Director of Sucden do Brasil and Felipe Ferraz, Director of Golden Agri-Resources (GAR). The moderation was in charge of Ivan Melo Filho, Partner at DATAGRO Financial. According to Garcia, the reality is that the vector of the crop has changed, moving from ethanol to sugar. With the measures of social distance, sales and, consequently, biofuel prices have been decreasing, a fact that is also due to the decrease in fossil fuel prices. According to Ferraz, the sector’s liquidity is now in sugar and the mills will seek to maximize the production of the sweetener. “In fact, I already see more” life “in sugar right now, with the mills already looking to make more of the sweetener at the beginning of the harvest, but it is necessary to wait for the developments,” said Austin. The point of inquiry, stressed Ferraz, is “how long will the demand be strongly guided by the coronavirus and the effects that the pandemic causes?”. Another point highlighted by the specialists refers to the scenario of stocking of products, especially ethanol with the advance of the crop grinding. In Garcia’s assessment, if the demand for ethanol is not normalized, the sector may have problems to store the biofuel and even the sugar produced. Melo stressed that eventually the milling process may be postponed if, in fact, this problematic framework regarding storage is configured. For Austin, the demand for ethanol should start to improve from September.
Source: Universo Agro / DATAGRO