Sao Paulo, June 2 - Higher international sugar prices could lead Brazil's Cosan , one of the world's top producers of the sweetener, to increase the sugar-production share of its 2009/10 cane crush to up to 55 percent.
This compares with the 50 percent of the cane crop the company expected to use for sugar earlier this year and the average of 42 percent in the sector, the company's chief commercial officer, Marcos Lutz, said on Tuesday.
"Returns with sugar have been 30 to 40 percent higher than with ethanol, and our decision is to maximize sugar production this season," Lutz said on the sidelines of the Ethanol Summit in Sao Paulo.
Lutz said the exact percentage of Cosan's cane crop used for sugar production will ultimately depend on weather conditions. The portion of the crop not processed into sugar will be used to make ethanol.
Usually, when weather is dry during the winter months (May-July) mills manage to extract as much sugar as possible out of the cane harvest. Final output of the sweetener also depends on the company's industrial capacity.
Mills tend to favor ethanol production when weather is rainy, typically early in the harvest season beginning in March-April and late in the harvest in November-December.
After the purchase of the Nova America group of mills in March, Cosan raised its cane crushing capacity to 60 million tonnes per year -- more than Australia, the world's third biggest sugar exporter, produces.
Cosan's sugar output could reach 3.7 million tonnes, compared with 3 million tonnes last season. Exports of VHP sugar (raw) are expected to total 3 million tonnes in 2009/10, up from around 2.5 million tonnes, Lutz said.
Brazil is widely expected to increase sugar production this year with sugar prices close to a three-year high, while ethanol prices have been pressured down and are below production costs, analysts said.
The global financial crisis left several mills in Brazil with no option but to sell ethanol on the local market at any price to raise cash for expenses and debt payments.