Increasing electricity price could help brazilian industry

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The drought in Brazil , has generated speculation on world sugar markets in recent weeks , as commodity prices may suffer major changes , if indeed there is injury to the production in the country . To Pedro Verges , INTL FCStone Inc. Analyst the climatic factor influences the market, which already ranges before the excess sugar in world stocks , for the fourth consecutive year.

” Certainly the drought observed in Brazil is injurious to sugar cane and consequently the production of sugar and ethanol . In a pessimistic scenario where it would not rain much until March and it would rain during the harvest ,that would result in a significant reduction in sugar production, in this case , ethanol is still gaining ground at the expense of sugar, which can sustain international prices , however, an optimistic scenario , where the rains are back the sugar cane,will have time to recover productivity, “he explains .

To Verges , an aspect rarely considered , and which in his opinion may help the industry is increasing the price of electricity.

” If there are auctions with record prices seen today , the remuneration of cogeneration can help power plants, which have sold over the network . Important to remember that it depends on the energy auctions of MME / ANEEL , some countercyclical factors may mitigate loss of plants , such as the increase in energy prices and international prices of the sweetener , “he adds .

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