Alvean forsees logistical bottleneck in the outlet of sugar and grain production

The simultaneous increase in soy, corn and sugar production in the country this year could create a logistical bottleneck in the flow of products, said Paulo Roberto de Souza, CEO of Alvean, Copersucar’s trading business, this Wednesday during an event organized by XP in Sao Paulo.

Alvean’s expectation is that the bottleneck will limit the export of sugar to 2.5 million tons per month, and estimates there will be a need to ship around 3 million tons at the peak of the harvest. “The crops are growing and there is a forecast that the superharvest of grains will collide with a large sugar harvest from April”, he reinforced.

Please find below the record of Brazilian sugar exports (hs code 1701), in terms of monthly volume, from Jan 2019 to Nov 2022. The data is from the DataLiner market intelligence service.

Sugar exports -Brazil | Jan 2019 – Nov 2022 | WTMT

Source: DataLiner (click here to request a demo)

Grains have advantage
In the competition between sugar and grains, the latter must have greater power to guarantee space on railroads and port terminals. “Eventually, sugar may not be able to pay what grains can pay for the same period, due to price dynamics,” said Souza.

Sugar production in the Center-South of the harvest that will begin in April (2023/24) should grow by at least 5% due to the advance of the cane harvest and sugar mills, according to projections by consultants in the segment. The soybean harvest is expected to increase by more than 20%, according to the latest estimate by the National Supply Company (Conab).

Souza lamented that Brazil will have to “manage” the supply of sugar precisely at a time when “the world is in need of sugar and stocks are low”.

The consequence, he said, will be “lost opportunities to sell the product at the right time and, therefore, [loss of] price, and often cost increase”. The cost of demurrage (delay) for a ship in the port of Santos is US$ 15,000 per day.

Source: Valor Econômico

To read the original report, visit: https://valor.globo.com/agronegocios/noticia/2023/02/01/alvean-prev-gargalo-logstico-no-escoamento-das-produes-de-gros-e-acar.ghtml

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