“While the Center-South region has maintained the same level of planted area of sugarcane over the past 10 years, the State of Mato Grosso do Sul has grown 37%…”
Martinho Ono is the CEO of SCA Brasil, with a degree in economics from the Pontifical Catholic University of the State of Paraná.
SCA Brasil is specialized in the physical biofuels market, providing ethanol and biodiesel trading services, consulting in market intelligence, and acquisition of inputs and logistics services for agribusiness companies.
Martinho Ono, CEO of SCA Brasil
AgriBrasilis – Will the fires in sugarcane fields in the State of São Paulo increase fuel prices?
Martinho Ono – The combination of high temperatures, low humidity and winds caused fires throughout the sugarcane region, not restricted to the State of São Paulo.
We do not believe that hydrous ethanol prices will increase for the following reasons:
- The burned area of sugarcane represents around 1.5% to 2.0% of the total, therefore a small percentage compared to the total area;
- Of the total area available for this harvest, we should consider that more than 60% had already been processed, with no impact on the production of this harvest season;
- Burned sugarcane was processed, even with a loss in sucrose and tonnage per hectare. Therefore, it was not a total loss.
- Burned sugarcane makes sugar production difficult, so we are foreseeing a more ethanol-based mix for these areas.
We understand that for this harvest season the milling loss will be small, but with greater consequences for the next season.
Therefore, the production and supply of ethanol will not vary greatly, with concerns about rising prices.
AgriBrasilis – How are the fires affecting the plants?
Martinho Ono – The mills affected by fires are forced to change their planned milling rhythm, having to prioritize the cutting of these sugarcanes, many of them early. There will also be additional unforeseen expenses for the recovery of the burned area, including replanting. In some cases, the mills will have to renegotiate sugar supply contracts.
“We understand that for this harvest season the milling loss will be small, but with greater consequences for the next season”
AgriBrasilis – The dry weather was already considered harmful to sugarcane before the fires. What is the quality of the crops that were not affected by the fires?
Martinho Ono – The lack of rain since the beginning of the year has already been reducing yields, projecting a smaller harvest. Mills have reported difficulty to produce sugar due to impurities and low yield in Tonnes of Sugarcane per Hectare (TCH).
AgriBrasilis – What is the status of the biodiesel market in Brazil?
Martinho Ono – With the blend of 14% biodiesel in diesel oil, we have increased the share of this biofuel, which was celebrated by the production sector. Optimism was reinforced by the estimated increase in the blend for the coming years, with the possibility of reaching a 25% blend, as provided for in the Bill – “Combustível do Futuro” (Fuel of the Future). However, we have found many irregularities in quality, since some distributors have not mixed biodiesel as required by the ANP (National Petroleum Agency) regulations. This is because biodiesel costs are higher than diesel A.
AgriBrasilis – How has the State of Mato Grosso do Sul expanded in the sugarcane and energy sector?
Martinho Ono – While the Center-South region has maintained the same level of planted area of sugarcane over the last 10 years, the State of Mato Grosso do Sul has grown 37%, therefore with a high investment level in the sugarcane and energy sectors.
Since the State of Mato Grosso do Sul is a state with a strong vocation for grain production, investments in corn ethanol factories have intensified, with 3 new units opened up recently. The state is on its way to become one of the states with the biggest ethanol production in the country.
AgriBrasilis – The State of Mato Grosso do Sul has made important taxation changes that favor the sales of hydrated ethanol in the domestic market. What are these changes and what have been the consequences?
Martinho Ono – The reduction in ICMS (tax on sales and services) charges on sales within the state has greatly increased the competitiveness of biofuel in relation to gasoline type C.
Only in the 1H of 2024, sales of hydrated ethanol grew 173% compared to the same period in 2023.
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