Brazil sugar mills boost machine purchases as outlook improves
By Marcelo Teixeira
SAO PAULO, Sept 20 (Reuters) - Brazilian sugar cane mills are increasing purchases of machinery in an effort to improve efficiency in the field as the robust demand outlook for the sweetener encourages companies to boost investments.
Makers of cane harvesters such as John Deere and AGCO are ramping up production in Brazil as deliveries rise, finally seeing past investments in local manufacturing lines beginning to pay off, said executives.
Brazilian sugar producers are entering the final stages of the 2016/17 crop as futures prices for raw sugar hit a four-year peak in New York, supported by forecasts for at least a two-year global supply deficit in the commodity.
Brazil's center south is expected to harvest a near record crop for the second year in a row, taking advantage of an excellent market while other sugar producing countries such as India and Thailand reap smaller crops due to poor weather.
"Some mills are rushing to buy harvesters and other equipment, because they want to be sure they will be able to process all available cane," said Marco Gobesso, head of marketing for cane machines at American equipment maker AGCO.
AGCO's Ribeirão Preto plant, in the heart of Brazil's cane belt, is producing double the number of harvesters this year compared to 2015 and has room to do more.
The company invested around 100 million reais ($30.5 million) in the plant after buying a local producer in 2012. But it is still working at only 40 percent of the capacity, after a long cycle of low sugar and ethanol prices that ended in 2014 sharply reduced investments in the sector and sent dozens of mills into bankruptcy.
Grupo Moreno, a family-owned sugar company in the Ribeirão Preto region, is an example of the recent equipment-buying move. Continuación...