SAO PAULO, June 18 (Reuters) – U.S.-based food processor Bunge Ltd is in talks with major sugar traders looking for the best terms to sell around 300,000 tonnes of raw sugar to be produced by its Brazilian unit as part of the 2018-19 crop, a Bunge executive told Reuters on Monday.
Bunge announced earlier this year that it was closing its global sugar trading desk. With the move, an additional volume produced in Brazil that would normally be traded by Bunge overseas will have to be delivered to other traders such as Alvean and RAW.
Geovane Dilkin Consul, vice president for sugar and bioenergy at Bunge South America, told Reuters that in the past the Brazilian sugar unit used to deliver 70 percent of its sugar to international traders, with around 30 percent remaining the charge of Bunge’s sugar trading desk.
Bunge’s Brazilian sugar unit exports around 1 million tonnes of sugar, so the 300,000 tonnes that would usually be delivered to the company’s sugar trading arm will from this season onward be sold to other major traders in the sector.
“We do not have a preferential partner, we are talking to all the major traders looking for the best terms,” Consul said on the sidelines of an industry seminar in Sao Paulo.
Bunge announced last week it was cancelling plans for an initial public offering (IPO) of its Brazilian sugar unit, saying adverse market conditions made the deal difficult.
The executive declined to comment on the issue, saying that kind of operation was being handed by top management in White Plains, New York, Bunge’s U.S. headquarters.
But Consul said there has been no major changes in the sugar unit’s day-to-day operations so far.
It expects to crush 20-21 million tonnes of cane in the current season (2018-19, April-March) compared to 19 million tonnes in the previous crop.
He said cane processing was advancing quickly due to drier-than-normal weather in Brazil’s center-south region and the company was keen to produce as much ethanol as possible to maximize returns.
“We are testing our limits (for ethanol production),” he said, adding that the unit was earmarking 39 percent of cane to sugar production currently and 61 percent to ethanol output.
Consul said that dry weather could hurt cane volumes. The company will run an evaluation of cane fields this month to check if it will maintain its crush estimate or reduce it.