I copy here Cosan forecast update rational. Note: 1- because they are selling more fuel ( gasoline, ethanol...) due to the "GROWTH OF VEHICLE FLEET", this will offset the lower sugar production in original.
2- Due to higher prices ( for sugar, ethanol, and fuel), this will also make up the sugarcane harvest.
For the past 2 years, ZACKS analysis - real points put forward - were not factual.
1. mix of ethanol in fuel will be less. In 2009,ethanol was lowered from E25 to E20, while ethanol supply was very low. Ethanol price went WAY UP. Now ethanol production is back-up, prices are still up. But better yet, Brazilian ethanol invested in storage tanks to store ethanol so they can dispense the fuel as they go. They do not have to sell 'all they can' right after harvest. Steady as she goes, at a stable price; at a higher currency (brazilian reals than the EURO); why the EURO? This is where they were shipping their extra ethanol ( not the U.S).
2- re: flex fuel vehicle tax will be or was lowered? Have they tracked the number of FFV cars sold and already in the fleet? Have they noted that BUSES and Motorcycles are now using ethanol in Brazil? Just doing fuel management, less cars, more public transportation. Just total fuel management when demand is high, and sugar is high!
3. Zacks mentioned the forecast adjustment made Cosan. Yes, they adjusted the volume of sugarcane and sugar down BUT because prices are also higher than the old forecast, p*v= q, they kept the same Revenue forecast. Since Zacks report is two months after this was reported, they should have NOTED THAT PRICES AND VOLUME ARE EVEN HIGHER THAN WHEN THE FORECAST WAS UPDATED. Prices went up due to QE2, sugar supply from India ; and today supply from Australia. Sugar Volume went up in Brazil because when prices went up to the 30c/lb for March, the diverted some more sugarcane from ethanol to sugar. But mind you that sugar margins are higher than ethanol. Zacks analysis is just 'short on brain matter'. Thank you for the pull back.