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British trader Czarnikow enters Brazil's ethanol, power markets

NEW YORK (Reuters) - British food trader and supply chain services provider Czanikow Group Ltd said on Thursday it will start operations in the Brazilian ethanol and power markets, as it expands its business with local sugar mills that also produce fuel and electricity.

Czarnikow has been granted the green light from Brazil’s oil and fuels regulator ANP to open a new company called CzEnergy to trade ethanol in the country, a market the company says is 50% larger than the one for sugar.

Ethanol accounts for around 40% of the fuel used by Brazil’s light vehicle fleet, the world’s second largest market for the biofuel behind the United States. Most Brazilian cars have engines that can run on 100% hydrous ethanol.

“The sugar producer, not only in Brazil but in other places, is also producing ethanol and electricity (from biomass). So, we want to provide services on trading, financing and hedging for other products than sugar,” said Tiago Medeiros, head of Czarnikow Brazil.

The company plans to trade electricity in the so called ACL market in Brazil, a business environment with less regulation where consumers and producers can freely clinch supply contracts.

Brazil’s ACL power market has grown three-fold in the last four years, as the current government looks to deregulate the sector.

Medeiros said the Brazilian unit is having a good year as sugar export volumes soared due to rising local production and poor crops in other places. Brazilian exports are up near 60% in the current season.

He said Chinese sugar buying has been strong, due to larger import quotas distributed by Beijing to importers.

“They will probably buy around 5 million tonnes this year to be the world’s largest sugar buyer again,” he said.

Reporting by Marcelo Teixeira; editing by Grant McCool

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