Fitch Ratings gives the thumbs down to Latin America’s ethanol sector for 2017

In Brazil, the 2017 sector outlook for Latin American sugar and ethanol has shifted to positive from negative, according a new Fitch Ratings report. “Systemic risk receded due to soaring international sugar prices. While forecasts point to positive fundamentals for sugar prices for the next two seasons, a more selective approach by banks and capital markets in Brazil is expected to concentrate funding toward well-managed companies,” said Claudio Miori, Associate Director.

Brazilian sugar prices are reaching record highs when compared with the last 10 years. Sugar prices are rising fast on the back of supply and demand imbalances and increasingly long positions held by investment funds buying the commodity.

Assuming satisfactory weather conditions, Fitch anticipates the positive momentum for sugar prices to offset high operating and interest costs, leading to increasing cash flow from operations