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February 27, 2020

Brazil's Largest Sugar Mill May Add Corn to Produce Ethanol

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

The largest sugar mill in the world, which is the Sao Martinho mill located in the city of Pradopplis, Sao Paulo, is considering retrofitting the facility in order to make ethanol from corn so that the facility can operate year round. In a teleconference with analysts and investors, the Director of Finance indicated that they are analyzing the proposal very carefully, but a final decision has not been made.

There are numerous sugar mills in the center-west region of Brazil that have been retrofitted to utilize corn to make ethanol during the summer rainy season from December to April when sugarcane is generally not available. This allows the facilities to operate year round instead of being shut down for 3-4 months. These facilities generally utilize sugarcane residue to power the facilities when corn is being processed.

Most of the retrofitted mills are located in the center-west states of Mato Grosso and Goias where there is a surplus of corn production. One of the factors the Sao Martinho facility must consider is the cost of transporting the corn from Mato Grosso for example. The director of finance feels the facility has the economy of scale to afford the additional transportation cost. He feels that keeping the facility operating the entire year should more than make up for the cost of transporting in the corn from the center-west region of Brazil.

The Sao Martinho Group operates four sugar mills and their facility in Quirinopolis, Goias is already being retrofitted in order to utilize corn to make ethanol.

Market analysts feel there may be more opportunities to retrofit other sugar mills in the state of Sao Paul, which is the heart of sugarcane production in Brazil. They cite the fact that corn is already being transported through the state of Sao Paulo on its way to the Port of Santos for export. Therefore, it would be relatively easy to divert some of that corn to sugar mills in the state in order to produce ethanol.