Brazil’s Cosan Rises as Sugar, Ethanol Prices Climb

Cosan SA Industria & Comercio, the world’s biggest sugar-cane processor, gained to a 15-month high as the price of the sweetener rose in New York and demand for fuel pushed up ethanol prices in Chicago.

Cosan rose 3 percent to 24.40 reais in Sao Paulo trading, the highest level since September 2008.

Sugar for March delivery rose to 27.26 cents a pound, the highest since the contract began trading. Bunge Ltd., the world’s second-largest sugar trader, agreed to acquire sugar mill Usina Moema Participacoes SA for about $416 million in stock. Petroleo Brasileiro SA, Brazil’s state-controlled oil company, plans to buy stakes in two or three ethanol mills next year, Reuters said Dec. 23, citing Ricardo Castello Branco, ethanol director of the biofuels unit.

“The news about Bunge helps, but that’s been out there for a while. What’s really driving the price is sugar at 27 cents,” said Leonardo Scutti, analyst at BES Ativos Financeiros in Sao Paulo.

Sugar has almost doubled this year as excess rain hampered harvesting in Brazil and India, the largest producers, extending a global supply deficit.

Cosan, which got about 41 percent of revenue from ethanol sales last year, said Dec. 24 that a 1.2 billion reais ($688.9 million) contract with ALL America Latina Logistica SA, Latin America’s biggest railroad operator, to expand ALL’s transport capacity is valid starting from that date.

“What the market is waiting on now is for Cosan to give details of funding” for the agreement, Scutti said in a phone interview.

Denatured ethanol for February delivery rose 1.9 percent to $1.94 a gallon in Chicago trading.

Curitiba, Brazil-based ALL rose 3.6 percent to 16 reais.

source: bloomberg