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Thanks, I definitely have more homework to complete before expanding the position. I'm not as interested in the ethanol and energy component given the potential for a double dip in the price of oil. I am interested in raw sugar given that a 10 to 15% supply deficit is projected for this summer. CZZ is also a good play on the recent weakening of the US $. Who knows Brazilians may even benefit by ousting Rousseff .
Their earnings release contain some very detailed segment charts, with volume, prices...
In their conference recorded calls, they usually stated the status / direction of their sugar hedging positions. They pre-sell a percentage of their projected production; they do not take currency risk.
in their last two calls, they were building inventory, expecting prices to come up... ( ie they had not pre-sold in great quantity).
Also to note for last 6 months, the market price of ethanol in Brazil is much higher than U.S. base fuel. Hard on the public there, but prices are set by oil... not by ethanol. So they benefit from an umbrella price going up, as long as they stay below the umbrella.
They are generating cash/// direction is to pay down $ debt to deleverage.
Bought into a small position at the start of the week, I generally don't like chasing after sizable gains, however CZZ is still relatively low relative to historical share prices and I was afraid of it getting away without a decent pullback . So far it looks good. The majority of the run appears to be occurring on the weakness in the US $. I'm seeing similar run up in SBS.
I heard of the world wide sugar deficit in 2016 (primarily due to the weather in Aisia, as you mentioned). However, it is not exactly clear how levered CZZ is to raw sugar pricing, they have diversified extensively into energy, transportation, etc. I'm not proficient in Portuguese, so it is hard to get the info from the Annual reports and the translate feature provides incomplete data. From what I can see the Raizen unit (which I believe includes raw sugar) appears to account for about 55% of CZZ earnings. However, Raizen may also include other non-sugar related earnings. Any insights?
One segment of this company is its Sugar Production,
Export Services( via assets of port terminals...) and export contracts ( buy local sell ww)
And Selling locals ( at Gas station stores).
1. sugar Price level is important
2. WW demand and competion is important
3. ethanol production taking away cane supply is important...
4. WW and local - weather is important
So what is in the News,
a) La Nina, El Nino WW
b) WTO claims agains Thailand ( the other large exporter)
c) India and China production affected by weather
d) China demand
e) Locally, Cosan gas station stores gaining market share
Keep an eye on sugar, not just fuel marketing and distribution !
At last CC, local prices for what they make higher than before. Future prices increases possible, but not yet in a rosy forecast. Forecast more cash to be generated. Second, in a down market, they gained market share, enough to have a minor decrease in top line, while increasing bottom lie.
Furthermore , weather ( ie La Nina) might create a spike in value of sugar.
This biomass investment is an unexpected growth area, becoming public .
hey el- so you buy something other than PEIX. I picked some up around czz up around 3.35. tough stock to call. but these runs seem pretty resilient. Be interesting to see if it can go all the way to 3.70's