Sao Martinho SA SMTO3.SA, a large Brazilian maker of sugar and ethanol, said on June 21 it plans to produce more of the cane-based biofuel and less sugar from its 2021/22 crop.
Sao Martinho said it intends to use 58% of the cane to make ethanol, up from 53% for the last crop. “We believe ethanol prices will stay at a higher level along the season compared to the previous crop, a result of higher oil prices and the recovery of fuel sales in Brazil,” the company said. The guidance from one of the five largest sugar cane processors in Brazil is somewhat surprising as analysts have been expecting mills to keep a strong focus on sugar production in the new crop, basically repeating the production mix seen last season. Sao Martinho reported a net profit of 927.1 million reais ($185 million) in the crop year ended in March, 45% more than in the previous season, due mostly to higher sugar prices.
Brazil is widely expected to have a poor sugar cane crop this season due to drier-than-normal weather during the cane’s development period. Sao Martinho said it expects to crush 9% less cane in the current season.