Drought in Brazil’s Center South region which is responsible for 90% of the country’s sugar crop, could cut the harvest to 550 million tons from 596 million tons in 2013/14 and the crop for next year is already being forecast to fall even further because of delay times between replanting and production. Because of poor harvests the country’s mills have seen debt increase by 10-fold since 2002/03 bringing the amount of debt the sector is carrying to its highest point in history. Earnings before interest, tax, depreciation, and amortization (ebitda) for Brazil’s mills are poised to fall to R$11.3 billion (US$5.08 billion) in 2014/15 from R$13 billion (US$5.85 billion) last year. Since 2008 66 mills have closed and the performance within the sector continues to widen with 18 mills responsible for 140 million tons of cane output falling into a ‘quadrant of death’ signaling further consolidation. Currently Bunge is attempting to sell its cane assets in the region, and recently the Santa Cruz operation has been acquired by Sao Martinho.
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