Copersucar becomes global leader in sugar

The Brazil is the largest global supplier of sugar since 1995, when the European Union and Australia against exports of the commodity. This business has always been led by multinational trading companies, and there are at least ten years the American Cargill is who gave the cards. In the last harvest (2012/13), which ended on March 31, the forces have changed. The Brazilian took the lead this market Copersucar, as a result of his own aggressive expansion strategy and also of Cargill's decision to retreat on that front, at least temporarily.
Copersucar, which late last year had already become the largest world ethanol trading company, to buy control of the American company EcoEnergy, sold 8 million tons of sugar during the season closed on March 31, about 1 million more than in the previous cycle. Already the movement of Cargill, which reached 9 million tonnes in 2011/12, fell to around 7 million tons, according to market sources. The same sources say that the decision of the multi of retreat was taken after losses registered in the operation.
"The teams are very desfalcadas, in Brazil as in Geneva [Switzerland], where is the command of this area," said a trader to value. In a statement, Cargill reported that its strategy is directed to more profitable business, with a focus on margin, and not just in sales volume. The company said that the next leader in sugar, but did not reveal the volumes.
According to sources in the area, Cargill's strategy changed after the fall of 56% in its net profit in the year 2012, which began in June 2011 and ended in May last year. Weighed in this negative result losses on sugar and cotton. This would have been the reason for the departure of the Executive leader of the sugar of the multi, Jonathan Drake, who was 26 years in the company.
With Drake, left almost all "key executives" of the operation. "Almost all the command changed. In Switzerland, took forward the grain traders. In Brazil, there was a stampede and the leader went to a competitor, "says a source. At its peak, the American came to move 12 million tons globally. Despite operations with various commodities around the world, Cargill in Brazil originates about 70% of sugar that moves. It is estimated that 30% of the company's volume comes from supplies in the bag-with the physical liquidation of their long positions.
Another issue that weighed is the very change of Brazilian sugar production and marketing: tradings turned power plants and dams strengthened direct sales to the target. It is estimated that only with the more aggressive strategy of Louis Dreyfus Commodities and Bunge competitors in buying sugar cane mills in Brazil-between 2009 and 2010-Cargill has lost "factories" which sold 1 million tons of sugar.
In addition, the company lost port space. Got half of the operation that had the Guarujá Sugar Terminal (Teag) after the Dreyfus bought Santelisa Vale and led along the part of the trading terminal Crystalsev. "When the society was with Crystalsev Teag, who operated was Cargill. With the entry of Dreyfus, the American was only with 2 million tons of capacity, "says another trader.
The smaller appetite of Cargill, whose total global revenues reach $ 133 billion, coincided with the greater aggressiveness Copersucar, which should earn r $ 16 billion in 2012/13. In the last three years, the Brazilian has expanded its sugar Brazil origination of 5.2 million tonnes (2009/10) to 8 million tons (2012/11), with guaranteed production of their members, which account for over 85% of the total.
The company has expanded the capacity of its port terminal 5 million to 7.5 million tons and created a shipbroking company with the largest refinery in the world, the Al Khaleej Sugar (AKS), which brought him the missing logistics advantage. Also recently opened a subsidiary in China to win the market in Asia, in purchases and sales. "We have a business model focused on raw sugar and that integrates the entire chain, from production, logistics and the destination", says the President of Copersucar Paulo Roberto de Souza.
Competitors complain that Brazil has an aggressive strategy of discounts to customers, mainly from the VVHP, a higher quality raw sugar and that today accounts for one third of the volume exported by the company. But Sharma rebate saying Copersucar is growing without destroying margin. "Because we are in the entire chain, we have operational benefits that competitors don't have," he explains.
Of the total 8 million tonnes from 2012/13 by Copersucar, 6 million tons were shipped abroad and 2 million have been sold domestically. In 2013/14, the company intends to raise its total volume of sugar to 9 million tons. Copersucar sells for 12 major sugar refineries in the world and, in some, is responsible for 60% to 70% of the supply of the commodity.