Low oil and pandemic affect sugarcane crop

Since the beginning of the pandemic, the price of oil has fallen 40%, to below US$ 30 a barrel, which brought down the price of gasoline and consequently directly affected ethanol. With the current crisis and the decline of the commodity, sugarcane culture has had a great impact in Brazil. In an interview with Estadão, producers said that sugarcane ended up losing its space for grains – soybeans, corn and even peanuts. 

Until February, the sugarcane sector had come to present one of the best results of recent years – the price of sugar was around 15 cents per pound-peso. At the moment, it’s around 10 cents. Because of this, most of the plants had already sold sugar for export and the demand for ethanol was firm. However, it was from March that the situation worsened. 

Producers who supply raw materials to plants in judicial recovery, for example, run the risk of not being able to honor their debts and are in a more complicated situation. In the Central-South region (Midwest, Southeast and South), which concentrates most of the country’s production, with 350 plants, the situation becomes even more complicated for those who only have distilleries – of the 267 production units, 80 only produce ethanol. With the uncertainties caused by the pandemic, most companies already in financial difficulties go down the same path.