Brazil's sugar industry will expand to help fill a global supply deficit, but that process could take longer than hoped, the chief executive of Bunge Ltd. said on Sunday.
Some 70 Brazilian sugar mills have filed for protection from creditors in the past three years as a long period of depressed sugar prices squeezed profit margins.
However, the global sugar market is now shifting into deficit in 2015/16 after four years of surpluses, driven in large part by higher than expected global consumption, traders and analysts say.
"Brazil's (sugar and cane-derived ethanol) industry is at a turning point and going towards better times," the global food and agriculture company's head Soren Schroder told a panel at the Dubai Sugar Conference.
Brazil was the only origin supplier with the potential to fill the demand gap, but to do that it needed to increase annual crushing by over 200 million tonnes by 2025.
"We can argue that it is the uncertainty of the last 7-8 years that will make it very difficult to get that expansion," Schroder said.
"The industry is very fragile... It needs a period of stability to meet that expansion."
In Brazil a greater share of cane is expected to go to sugar in 2016/17 than in the previous season, providing a boost to global supplies, with prices more remunerative for the raw product than for its ethanol derivative.
Brazil's sugar industry has also benefited from a falling real currency, which has weakened 34 percent against the dollar over the past year to give its producers a competitive edge.
Source: www.reuters.com