March 31, 2014
Cargill and Copersucar Form Joint Sugar Venture
Cargill and Copersucar announced late last week a joint venture that would combine their sugar activities in Brazil and create the largest sugar company in the world. The joint venture still needs to be approved by the Brazilian government, but there are not expected to be any objections.
The joint venture would control more than 70% of the sugar exports from the Port of Santos and 25% of the world's sugar exports. These figures though will only be reached when Copersucar's Sugar Terminal (TAC) at the Port of Santos is completely rebuilt after the devastating fire last October that destroyed or damaged most of the terminal. As the terminal is being rebuilt, Copersucar estimates that they will be able to export 4 million tons of sugar this year and 10 million tons per year starting in February of 2015.
Copersucar is an association of 47 sugar mills in southern Brazil which sold 8.5 million tons of sugar during the 2013/14 harvest, 6.5 of which were exported. During the same period, Cargill sold 8 to 10 million tons of sugar. Consolidation in the industry is expected to continue due to weak sugar prices. Sugar prices have fallen 40% since their peak in 2011/12 resulting in margins as thin as 2%.