Brazil's Copersucar loses top sugar mill as industry woes deepen
By Reese Ewing
SAO PAULO Aug 13 (Reuters) - Copersucar, Brazil's biggest sugar trader, quietly parted ways with its biggest milling group in May, the CEO of the milling group, Grupo Virgolino de Oliveira (GVO), said on Thursday, reflecting a deepening crisis in the global sugar market as prices languish near seven-year lows and debts mount.
GVO, one of the founding members of Copersucar in 1959, is the latest mill to break commercial ties with the trader. That curbs Copersucar's marketing power in Brazil, the world's top grower, and in the global market just a year after it set up Alvean, a joint venture with agricultural merchant Cargill.
Milling group Aralco ended ties with Copersucar in 2014 and Sao Martinho, another miller, did so in 2008.
Copersucar still has 40-plus associated sugar mills, and is unlikely to have trouble covering its delivery contracts. It said it would not comment on GVO's departure, other than to say that there are financial obligations outstanding.
GVO CEO Joamir Alves, who took over the company in January to restructure its debt, said in an interview the formal breakup in May was amicable and due to deteriorating credit conditions across Brazil's sugar and ethanol sector.
"If it weren't for our need to generate rapid cash flow to operate, we would still be with Copersucar," Alves said by phone from GVO's mill in Catanduva, one of four it operates in the main cane-producing state of Sao Paulo.
Copersucar extends guarantees to its associated mills to help them secure bank loans for operating cash. In exchange, the trader gets exclusive rights to sell 100 percent of the mills' sugar and ethanol.
GVO had reached the limits of the guarantees Copersucar could offer, Alves said. Continuación...