Bunge Ltd., the world’s second-largest sugar trader, is planting more cane in Brazil as it recovers from a drought and plans to run its mills full capacity next year, Chief Executive Officer Alberto Weisser said.
Bunge is cultivating new land while also growing cane on areas where crops were destroyed by dry weather last year. It will plant and replant about 50,000 hectares (124,000 acres) this month through May in Brazil’s Center South region, Weisser said. Bunge will have a total of 200,000 hectares growing cane at the end of the process, he said.
“We have been replanting massively,” Weisser said in a telephone interview today from the company’s headquarters in White Plains, New York. “There is more planting than replanting. We will not benefit from all of it this year but we will benefit in 2012.”
The drought in Brazil, the world’s largest producer of sugar, lowered the availability of cane. Startup delays at some of Bunge’s mills also helped to curb the company’s crushing capability. Its sugar and bioenergy unit, which lost $13 million in 2010, aims to boost cane crushing to 17 million tons in 2011 from 13 million tons last year.
“2011 will be a better harvest than 2010,” Weisser, 55, said. “It’s a bit early to say how much it will be because we are still in the growing season.”
Above-average rainfall in March in Center South, Brazil’s main sugar-growing region, will benefit the crop, he said. The rain may delay harvesting, Marcos Mine, head of the sugar and ethanol desk at ICAP Brasil in Sao Paulo, said March 18.
“These rains we are seeing at the moment are good,” Weisser said. “I don’t see any negative impact.
Raw sugar for May delivery dropped 1.2 percent to 27.16 cents a pound at 3:10 p.m. on ICE Futures U.S. in New York. The commodity has advanced 58 percent in the past year.
“Because of the strong real and high price of petroleum, farmers probably need to receive something like 22 to 24 cents,” he said. “If prices would drop below this, farmers would not expand.”
Bunge acquired its first sugar mills in Brazil in 2007 and added five more in the country in early 2010 after its $1.4 billion purchase of Usina Moema Participacoes SA.
The company is still interested in expanding in Australia, Weisser said. Bunge’s bid for closely held Australian producer Tully Sugar Ltd. was blocked Feb. 18 when Queensland Sugar Ltd. and Mackay Sugar opposed the removal of a 20 percent shareholding cap.
“Tully is an outstanding asset,” Weisser said. “We will continue to be interested both in Tully and also in others.”
Cargill, which is based in Minnetonka, Minnesota, is the world’s largest sugar trader.
Bunge also processes and trades grains and soybeans. Chinese imports of corn will increase over the next couple of years, especially for feed, Weisser said.