04/25/14 - The ratings agency Fitch issued a statement Friday, April 25 , warning of the risk of insolvency of the companies of sugar cane in Brazil. According to Fitch , the capital structure and weak cash flow closely combined raise the risk of default of these companies in 2014. * The cash flow is kept under pressure by the low prices of sugar * and * the high cost of diesel fuel, manpower and logistics. * Four of the six portfolio companies show a moderate or high risk according to Fitch refinancing and have limited alternative sources of liquidity. * These companies are still heavily dependent on credit from local banks . * according to Fitch the relationship between supply and demand tend to move toward a deficit , because consumption continues to increase from 2% to 3 % per year, but the low price of the raw material discourages new investments in production . * Fitch also believes that the Brazilian government should facilitate the price of gasoline and therefore must seek alternatives to support the sector , as it has done in the past. One possibility would be to increase the blend of ethanol * in * petrol to 27.5% , compared to the current 25% , as I told you long ago.
I estimate that the price of sugar 11 under $ 19 will result in the failure of many companies in the Brazilian sugar cane ( and Indian ) , this will further reduce the production of sugar cane, this in turn will have a positive effect on sugar prices .

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