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Combined with higher sugar prices, the scenario appears to be more positive.
Like meatpacking plants and food companies, the sugar and energy sector also released results for the fourth quarter of 2022 (4Q22), and as a result, speculation about where and how to invest in this sector has emerged in the market. However, it is necessary to be cautious and take into account what experts say on the subject.
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According to information released by XP Investimentos, in an interview with Money Times, cost pressure ended up squeezing the sector's margins in the last quarter of 2022. However, this scenario may change from now on, as Leonardo Alencar, an analyst at XP, says that the segment has been recovering productivity for the next harvest.
With this, combined with higher sugar prices, the scenario seems to be more positive in the near future. “Jalles Machado consumed a lot of inventory in 4Q22 and has little to consume now, São Martinho exports ethanol. For Raízen, there is this fear regarding the dynamics of sugar and ethanol, which was already challenging. There is still pressure, but they managed to carry out a lot of ethanol trading, which helped. I would say that 4Q22 was bad for sugar and ethanol and 1Q23 did not have many new developments. The expectation is that the structural situation will improve from 2Q23 onwards”, explains Alencar.
Due to the rise in sugar prices, falling production costs and the recovery in productivity, XP Investimentos is optimistic. In addition, factors such as the resumption of fuel taxes are driving up oil prices. “In our recovery projection, the sugar and energy sector should recover faster,” says Alencar.
Source: Leonardo Gottems | agrolink
