Sao Martinho SA
BOVESPA:SMTO3
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Sao Martinho SA
Earnings Call Analysis
Q2-2024 Analysis
Sao Martinho SA
The company highlighted current challenges in the ethanol market, with a particular focus on price parity, which is currently at 62%, substantially lower than the typical 70%. Ethanol consumption has started to pick up slightly, now fluctuating around BRL 1.4 to 1.6 billion. Despite this lower parity, it's still economically more advantageous for consumers to purchase ethanol, suggesting a potential increase in demand as prices adjust. The company anticipates a normalization towards the usual 70% parity by year-end, but they don't expect prices to return to the previous highs of BRL 3,000.
The company has strategically managed its sugar inventory, resulting in a hedge position where 73% of the volume for the 2023/24 crop year is priced at BRL 2,376 per ton, and 30% of the next year's sugar volume at BRL 2,972 per ton. This strategy is expected to yield better average sugar prices in the second half of the year compared to the first half. Looking ahead, about 30% of the 2024/25 production is already priced at a reasonable BRL 2,700 per ton, aligning with the company's positive outlook on supply and demand conditions.
The company's capital expenditures (CapEx) are estimated at BRL 2.7 billion, surpassing the initial guidance of BRL 2.5 billion, driven mainly by operating improvements. These include a biomethane project and initiatives to enhance agricultural yield. The investment also covers additional equipment due to an anticipated strong crop year. The company has been judicious with its maintenance CapEx since the pandemic but has decided to accelerate modernization efforts, anticipating a higher return on these investments in the forthcoming robust crop year.
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Good afternoon, ladies and gentlemen, and thank you for waiting. Welcome to the São Martinho S.A. conference call to discuss the results for the second quarter of the '23-'24 crop year. Here with us today are Mr. Felipe Vicchiato, Chief Financial and Investor Relations Officer; Alessandro Soares, new business manager, External Communication and IR and the Investor Relations team of São Martinho. The audio and slides of this conference call are being broadcast simultaneously over the Internet at www.saomartinho.com.br/ir. [Operator Instructions]
Please be advised that certain information contained in this conference call may contain forward-looking statements about future events. Such information is subject to known and unknown risks and uncertainties that may cause such expectations not to be realized or to differ materially from what was anticipated. Now I would like to turn the floor to Mr. Felipe Vicchiato, who will initiate this conference call.
Good afternoon, everyone, and thank you for joining us today during this earnings release call related to the crop year 23, 24. Now moving to Page 3. Here, we will talk about 6 major topics, the first operating topic, and we will talk about our expectation for crushing this current season. The main highlights of the quarter going through the cash cost, the ethanol market and how supply and demand is performing, the sugar market and the hedge thus far.
And finally, we will talk about the CapEx guidance for the year. So now moving to the next slide on Page 4. Here, we have a summary of how much sugarcane was crushed. We see 4% on a year-on-year comparison. Moreover, year-to-date, we are crushing more third-party cane rather than our own cane. We are crushing a lot of sugarcane from third parties, which has a better TRS. But this in terms of unit cost and cash cost is not so good. But throughout the crop period by the end of the crop year, we would be -- we will have around 70% of our own cane and 30% third-party cane, and this will certainly improve our unit cost.
This is important because our unit cost hasn't been dropped in a more substantial way. In terms of yield vis-a-vis last year is 18.7% higher, reaching 85.1% and the cane that is big cut. I mean, the plots have an average age of 3.5 years. So in the next half year, we will have plots with a lower average age and so this should increase yield. TRS was down by 25% in year-on-year comparison. Basically, the base of last year was very much contaminated by the severe drought from the previous crop year. And now TRS is almost back to normal. So far, we crushed 212 tons of corn, 420,000 tonnes is the total according to our guidance from the mid-June. Sugar production, all the Sao Paulo mills are now turning to the mixed sugar. The -- so far, 1.1 million tonnes of sugar, 12% higher when compared to the previous year. Sugar-based ethanol increased by 6.7% -- no, I'm sorry, it was down by 4.2% as sugarcane based ethanol. And that was offset by corn because we produced 82,000 cubic meters of corn-based ethanol. That's why there was an increase in ethanol basically due to the corn-based ethanol.
So that was -- that gave us about 7% higher when compared to the previous year. So in the Sao Paulo mills, the mix will be around 62%, 63%, sugar, 37% ethanol once the crop year is over. We anticipate that we will still crush 21.5 million tonnes until the end of the crop year, which will occur in the first week of December. Now if you look at the rainfall forecast, we believe that there will be some shutdowns. So we won't be able to crush anything more than that. We have approximately 1 million tons of cane in surplus, so that we will -- and part of that sugarcane will be cashed in March, depending on the rainy season in the summer and also in March, in the last 2 weeks of March we may have a better climate for that crushing.
Certainly, crushing the cane in March is never that good because once you do that with a very low TRS, we have to really look to see whether it will pay off. But this year, according to all of the information we have to date, we will follow the guidance of 21.5 million tons. If we are lucky enough, and the rainfall doesn't come that early, which would be unusual, given the El Nino that we're experiencing this season, we will continue to crush until the beginning of the second half of December.
Now moving to the next slide. Here, we have the financial highlights. There was a drop of 3% in terms of our net revenue despite the fact that the sold amount in TRS equivalent, we grew 6%. I mean, we grew -- I mean, there was a drop of 6%. No, sorry, he says. It was up 6%. EBITDA was down by 16.9% and 29%, so both revenue and EBITDA. This drop is mainly attributed to a lower price of ethanol. On a quarter-on-quarter comparison, ethanol was down by almost 30%. And ethanol sales volume was down also by around 9%. And this is the main reason why we lost some EBITDA margin and revenue.
Today, we are operating with the Sao Paulo ethanol prices very close to breakeven. And in some weeks, even below breakeven. Therefore, the market situation for ethanol, it's not that good, but that was partially offset with a higher sugar volume and a higher average price of sugar. There was an increase of 27% in volumes sold and 16% average price. And net revenue for sugar was up 50% in the half year. The difference between cash income and net income, cash was BRL 400 million. Most part of this cash comes from Copersucar court order debt security because we got it during this year, usually, we received that at the end of the year, November and December. But this event was anticipated. And therefore, we posted a gain. In our P&L, we have BRL 330 million and cash income BRL 200 million, approximately. I mean, BRL 300 million of cash income was attributed to court order debt security and the remaining came from the [indiscernible] operation, financial expenses, et cetera.
Next slide here, we bring some details about the evolution of our cash income. Cash income for sugar and ethanol involves maintenance CapEx of the company, maintenance of off-season. In the quarter -- I mean, quarter-on-quarter, first quarter of '24 compared to the second quarter of '24. In the case of sugarcane, there was an increase of 2%, basically this growth is attributed to the increase in sugar prices. We separate here what is Consecana and sugar, ethanol and ethanol. So basically, we started to see some dilution in fixed costs and not in unit cost of sugar that was going up even more.
In the case of ethanol, there was a drop of 27% in the cash income quarter-on-quarter. I mean, the second quarter of '24, part of that is attributed to ethanol, but there is another part of that, that involves higher cost dilution. Year-to-date, we are growing 13% for the sugar cash cost, and there was a decrease in the ethanol cash income. We believe that sugar cash would end the year, BRL 2,000 per tonne. This already reflects a spot sugar price like the one we are seeing close to $0.25 or $0.26 and then we expect the unit cost of ethanol to be close to BRL 2,480 per cubic meter, already anticipating an improvement in the ethanol cost by the end of the season. So at least there should be an increase of BRL 200 per cubic meter until the end of March, the end of the fiscal year.
I think -- if you read our release, you saw that out of our total production of sugar and ethanol, we have approximately 55% of the sugar volume to be sold in the second half and about 2/3 of the production volume of ethanol to be sold in the second half. I mean given the fact that prices were down substantially in the second half. So we decided to hold our ethanol inventories then to be sold in a better moment of the crop year. Therefore, we believe that by then prices will be a bit better.
Moving on to the next slide on Page 7. Here, we give you some more color in terms of the ethanol price evolution. We are now seeing one of the lowest levels since the beginning of the year was throughout the year, there were several announcements about increase in taxes, increase in gasoline prices. There was also a reduction in gasoline prices and increases in gasoline prices. And we see that today, gas prices at the refinery. It's pretty much in line with the international market. And now it's just a matter of seeing the demand going back to ethanol, so that by doing so prices will recover a little bit more.
Now next slide, still talking about ethanol, which is an outlier. We look at the parity of ethanol today is around 62% today, which is a very low level. When we look at the historical series since January of 2013. If we look at January '13 at the historical series, we noticed the performance of that parity and the behavior of the parity. In the midst of 2018, 2019, when parity reached 60%, we then noticed a quicker participation of the auto cycle. And there was 2 billion liters a month of ethanol that was going out.
And now consumption has picked up a little, but it's still about BRL 1.4 billion, BRL 1.6 billion, even with that parity of 62%. So -- at the end of the day, it's been more advantageous to fill the tank with ethanol. Of course, that there are different states of the country, but we hope that from today until the end of the year, that parity should go back to the usual 70%.
Another important aspect that we think also happened this crop year is that the industry has had a high inventory level, was working with high inventories of ethanol because everybody thought that federal taxes would be -- would return in January. But the fact is that taxes only came back in February and March. Therefore, there is a transfer inventory that is not normal. So in addition to that, this has been a very strong crop year in terms of crushing. And the mills have their inventories full. There will be a certain moment, which is right now that the mills are producing, but many of them do not have enough silage to accommodate all the products. And this will probably put some pressure on ethanol prices. We believe that by the end of the crop year, things will be more normalized and then prices would go back to the parity of 70%. But we don't think that the price would ever go back to that BRL 3,000 as it was the case in previous years.
Next slide. Here, we have a summary of our hedge position. We have, for the '23, '24 crop year, 73% of the volume that I will sell is priced at BRL 2,376 and for the next crop year, 30% of the sugar volume is 2,972. So two messages. In the second half, in terms of sugar sales, the average price will be better when compared to the first half given that we use a strategy to carry over the inventories of sugar to be sold at a better premium and it's been priced already. I mean 3/4 of it has been price. And for the next crop year, '24 and '25, we already priced about 1/3 of the production. We made a lot of progress, and it's a reasonable price of BRL 2,700 per ton, even though we think that the scenario is quite positive in terms of supply and demand. So within our risk policy in this period, I should have at least 30% already hedged, and that's what we did.
Now next slide. And -- and to conclude the presentation and to open for questions. We break down our CapEx. Our current estimate is that it will be BRL 2.7 billion of CapEx in view of an initial guidance of BRL 2.5 billion. The two major increases related to operating improvement CapEx and part of that involves the biomethane project that was recently started. That also includes irrigation projects that improve the yield of the company. We also have harvesting in two lines in two rows that will also improve the performance of the company. And there is a CapEx increase involving trucks, combines, et cetera. Given the need of having a greater availability of equipment for the next crop year. We believe that the next crop year will be very, very strong for São Martinho. Everything points to that.
When we look at our sugarcane crop yield should be very close to everything that I have already crushed. Therefore, we need to -- we would need to use more equipment. And that's why we're making that investment. It is also worth saying that since the pandemic in 2020, we are trying -- we've been tightening up our maintenance CapEx because of the price of the equipment and prices this year were down a little bit, but still far from the levels during the pandemic. That's why we decided to do that now. But when you try to expand your CapEx using the machine for another year or so, you increase your maintenance cost. But it comes a time when that is no longer very economic. And so this is what is happening now, and that is why we made the decision to accelerate the modernization and therefore, we decided to anticipate CapEx. I think these were the most important highlights, and now we open for Q&A. Thank you.
[Operator Instructions] Our first question comes from Luiz Carvalho from UBS.
Hi, Felipe, congratulations on your results. I would like to refer to some of the points you mentioned. And maybe we should revisit two subjects. First of all, could you please give us an update about the returns you have with a corn-based ethanol project because given this current ethanol landscape that you mentioned, which is a bit more challenging, how do you see the addition of capacity and new projects going forward. I think that the part about the return, is that along the lines of what you expected at the beginning?
And my other question is probably a recurring question, and that is about capital allocation. We are experiencing a very healthy sugarcane cycle for the industry there are record numbers everywhere. Even in BRL terms, the company has a very interesting investment pipeline. As you said it yourself, be it for improvements in general or to increase capacity -- to increase your crushing capacity. But I would just like to understand what is your view about expansions? Maybe you would expand your dividend payout at a given moment. And today, what's in the mind of the Board members and the executive side of the company?
Luiz, thank you for your question. In terms of corn-based ethanol. Clearly, this year, the results we anticipated for corn-based ethanol was totally out of what we expected. Corn prices to market. I mean if you look at the other peers, everybody was buying corn at that same level between BRL 65 to BRL 70 per bag already adjusted to logistics in terms of where each mill is located, but corn prices in May dropped substantially. And with that, DDG prices, and that's a very important by-product that does the corn hedge. And then there is also the issue of ethanol production, the ramp-up was a little slower and also the ethanol prices are really low. Therefore, this year, even in the release, we published a separate chart on corn-based ethanol. And I think that, that is -- we reach the breakeven. But next year, and looking at a better corn prices, and that's what we have and what we are anticipating, even with greater pressure on ethanol prices, I think that we will be able to get BRL 150 million of EBITDA in corn.
Even with pressures on corn prices and DDG, but we expect to see lower prices of corn when compared to what we acquired back then.
Now speaking about capital allocation, let's see. Some of our major projects, the first one was bio methane BRL 250 million to be ready by 2025, but this is a project finance. We are funding 90% using funding from BNDES and Finep and the cost of the funding is much cheaper. Otherwise, the project would not be feasible. And there is probably a second corn-based ethanol plant. This is a decision that is going to be made 2 years from now. The fact that ethanol prices were down a lot now and CapEx is much higher, I don't think we will make any moves in that direction.
But well, we are analyzing for the future in about 1 or 2 years, maybe have a sugarcane mill at Boa Vista. This is a possibility given the fact that today sugarcane-based ethanol is a lot more expensive than corn-based ethanol. We make all of the adjustments DDGS, which is a cost detractor and energy is a cost detractor for sugarcane-based ethanol, which is less competitive when compared to corn-based ethanol. Therefore, it will make sense for us to migrate to a product with a larger margin.
In Sao Paulo, next year, the plant will be ready to produce 100% anhydrous -- and if there was a win, if there is a window like we had last year, we will be able to deliver the product, but export ethanol from Boa Vista is complicated because of logistics. But at the current premium, if you think about a premium around 20% to 30%, maybe it will make sense. We already started some preliminary studies and now we are just assessing that to see its feasibility because we cannot just sit still giving this positive landscape for sugarcane.
In addition to all these projects, there are still some others. And then we will just analyze them in due time. And if it is the case, we will have some additional dividend payout.
I just have a follow-up. When do you think we should expect an investment decision in this new sugarcane plant? And what would be the magnitude of this investment.
Well, at the end of next year, I mean, the studies -- the feasibility studies just started now, -- so in order to -- we want to have sugar in the middle of 2025, this investment involves approximately BRL 500 million.
Our next question is from Gabriel Barra from Citibank.
I would like to understand a little bit more the mindset of the company. The first point is about ethanol exports. We saw a significant drop. And given the trading dynamics in Brazil, and we are a bit concerned. Therefore, I would like to hear a bit more about your strategy, your export strategy, your commercialization strategy going forward because some things may makes sense. But looking at exports, maybe it could be a possibility. So how is that window working for you?
The second point is about crushing. And your capacity depending on the performance of the crop year, if you could tell us a little bit more about the amount of sugarcane that you have available. This will help us have some idea of amounts by the end of the crop year. And if you allow me a last point, this would be about capital allocation again.
We took a deep dive in this new biogas project of yours. It's quite interesting. But can you please elaborate a bit more on a few aspects, especially leverage, cost of the debt for the project. I just want to understand the economics of the project and what will be the level of return of that project. We just want to check that against our own numbers.
Gabriel, thank you for your questions. I'll start from your last question. That project has a cost. Once you get Finep and BNDES, which is approximately 50% to 60% of CDI. And so this project I mean, the leverage return is around 25%. Ethanol exports now are answering your first question. There is no window today. We have no export windows, especially if you compare it to last year because given the Russia-Ukraine war, we had a window. But this year, there is no window. Exports are very insignificant, maybe in the second half, just 30,000 to 40,000 cubic meters, but very far from what we had last year. And our strategy is mostly concentrated once the crop season in Brazil ends. And we think that it is by the end of the season, that we will be able to have better prices given the closing of the parity. The parity today is at 60%.
And historically, I mean, in off-season, sometimes it reaches a number above 70%. But if it reaches 70%, it's good enough. So it will be about BRL 220,000 to BRL 250,000 per cubic meter. But now speaking about crushing, today, November 10, we are talking about three more crushing weeks. The assertive level to crush and reach that 21.5 million tons of crushed cane. It's a very good number. And as I said at the beginning, if the weather remains dry, we will continue to crush until we have no more sugarcane. But we think it's very difficult that we will crush everything. There will be some leftovers for the next crop season. And we could crush even in March, but this will also be carried over to the next crop year because once you harvest the cane, you have the [indiscernible] cane, so you need another crop year to grow it again.
The leverage level of the projects is about how much?
90%. Is at 90%.
Our next question is from Pedro Fonseca from XP.
My first question relates to freight, whether the delay in the grain trading has been a problem for you. And whether you could tell us a little bit about the company's strategy in terms of timing of closing some contracts? And how do you see this line especially thinking in terms of the next crop year I mean, '24, 25. And the second question is that I would like to understand whether you could give me some more color on this drop in energy traded, both in the quarter and in the first 6 months.
I'll start from your last question. The drop in commercialized volume is the combination of the beginning -- the start-up of the corn-based ethanol plant because we use energy to supply to the corn-based mill and the sale of our gas in the spot market that was paying better than energy itself. That's why we generate less. And the first question on freight. The bulk -- the bulk of our -- let's say the bulk of our sugar volume is dedicated to railroad. So 60% of our sugar is transported by railway. Therefore, it's not a problem for us to distribute that sugar. The problem occurs when you depend on trucks, and that is a problem because you may have difficulties to distribute that product, but we can transport almost everything by rail.
Now let me give you a follow-up concerning sugar from Boa Vista and still on that note about freight. We are running a study, but freight is a challenge in that location. So sugar at the Boa Vista firm -- in Boa Vista, combined with our tax benefit that is extended into 2032, this leads us to understand that this sugar has to be high for a long time at levels where it currently is, $0.25 and even $0.30 in some cases. And why? Because the plant is very far away. The plant is far away. So that's why the freight cost for that plant is obviously more expensive. And so we have two options. If ethanol gets worse, obviously, the sugar price at $0.28, $0.30 will be reduced, but any improvement on ethanol maybe they it would pay out to have a plant in Goiás, Mato Grosso or Mato Grosso do Sul because we also -- we would also benefit from some tax benefits.
Next question is from Isabella Simonato with Bank of America.
I have a few questions on subjects you already mentioned. The first is -- I mean, thinking about '24, '25 crop year, you said that you hope to get crushing very close to your record, which is a little bit below 23 million tonnes, if I'm not mistaken. If you could probably break down that calculation in terms of yield and probably also available sugarcane or whether the difference is mainly in terms of crushing days. So this is pretty much what I want to understand, looking to the next crop year. And my second question is on costs. Your projected cost for this year's sugar, whether that is, impact cash cost or whether you are also taking into account Consecana or not and probably whether that is what leads you to that increase. So how -- how should we look at that cost?
Okay. Next crop year. I mean, this improvement in crushing is mainly due to yield and not [ happier ] days. We are recovering the sugar crops since 2 years ago when we had drought and frost in two consecutive years. Last year, we planted a large area -- 18-month sugarcane to be harvested now in the next crop year, and that's why we should reach crushing very close to our record and even slightly above. Therefore, we are talking here about yield. Well, certainly, sugarcane suppliers can also help us because if our yield is better, theirs is also better.
Now in terms of sugarcane cash cost, yes, we are using Consecana for sugar, we separated 100% Consecana of sugar in our sugar cost because some years ago, when we were drawing up the cash cost for both sugar or ethanol, we would include Consecana because ethanol and sugarcane and sugar had a spread difference, which was not too relevant. But once the spread became different. The gap is different. Now that's why we made it -- we separated Consecana from sugarcane. And so this is mainly due to the increase in sugar cane prices.
We now have a question from Thiago Duarte from BTG Pactual.
Good afternoon, Felipe. It's good to talk to you. I would like to go back to that debate about cash cost. In fact, I want to hear from you about the evolution of the crop year and your view in terms of cash cost in the total of the crop year in this half year. Well, starting with that view that you had up to most recently, when you anticipated a more relevant drop in the unit cash cost. But now maybe the answer probably involves Consecana. I don't remember whether that was already factored in, in your anticipation for a drop of your cash cost or not. So I just want to hear what could be so different right now. This will be my first question. And then my second question is about I mean you already talked about your results in the first two quarters from your corn-based ethanol plant, you talked about several elements. I mean, the corn prices are much higher.
Ethanol is weaker. DDG, the same. I only want to understand that in addition to this pricing mismatch, I mean the corn that is coming in into your cost and the byproducts from corn that had a substantial decrease in price, whether there is anything else in terms of the operation that would justify the fact that margins are not so desirable. In other words, maybe to go from breakeven this year to that your EBITDA for next year, is that merely a matter of pricing cost? Or there are other elements involving like the plans or operating costs that we should expect that you are probably counting on until you reach that profitability level that you expect for next year?
And the third point is that I would like to hear your views about this release of capacity to convert more [sucrose] into ethanol, sugar and ethanol. You said that this could be a possibility for us to think about for next year and that would involve building a sugar plant in Boa Vista. We've seen moves in this direction by other players in other mills like the one in Boa Vista that only produce ethanol. I would hear from you. How much room do you think there is for Brazil to bring new sugar through this increase in your sugar and ethanol increased production.
Thiago, thank you for all your questions. I will start with the last question. I think we have to make a distinction here. Today in Brazil, we have about 120 million of industrial capacity. And these are capacities for pure ethanol and predominantly, this capacity is located in states that offer tax benefits, which makes the calculation a bit more complicated because in practical terms, the ethanol prices that I'm realizing in these state of the federation is an ethanol price that is approximately 10% to 15% above [indiscernible]. However, if ethanol price has spread that varies between 60% to 80% below sugar as we are seeing in this current season, it's difficult for ends not to meet.
So if we say, okay, if ethanol goes up a bit and it heats the parity and consumption improves to make a plant like that feasible, my sugar would have to be around $0.28 to $0.30 and not $0.05. And with that, I mean in practice, when -- when you calculate a plant like that, it's difficult for you to anticipate sugar prices after a period of 2 years. So okay, to make ends meet, you would look I mean between 70% to 90% of prices above ethanol. And then after the third, fourth year, the price would converge to about 20% above ethanol. So it's relative.
This is our current calculation for Boa Vista. And as I said before, we are certainly concerned about producing cane-based ethanol and then we look at the screen price that will be below cost. Therefore, it becomes very clear that we would have to run a very complete study to see whether it will pay off to eliminate some of that risk. Therefore in the Midwest of the country, there would be room to do that, but it certainly depends on the assumption of how much sugar prices will be above ethanol. In the case of the Midwest, is even worse because of the tax benefit. But now going to Sao Paulo, the major investments to improve the mix, they've been done in the past and ourselves included. In an attempt to make more investments in our current plans, Iracema, São Martinho, Santa Cruz.
I mean, it's not nothing quite relevant in terms of the amount of sugar that I can produce. If I want to place some relevant amount of sugar that will change my mix like to 80% sugarcane then it wouldn't pay off because the total CapEx for amount of sugar that I would produce wouldn't be feasible. Therefore, I think that Brazil, if we -- if you look at stretching it very much. Maybe you could have a period of 3 to 4 years, you would produce 3,000 to 4,000 tons in addition to that, giving all of the assumptions I mentioned.
Now going to the Midwest, you have important mills like São Martinho and Jarvis, et cetera, with an investment capacity that -- I mean that's another aspect. The mill has to have a good investment capacity. And this investment will be of around BRL 0.5 billion. I mean it's hard to see that you would spend all this money in an ethanol plant that will be converted into sugar. And then you run the risk of a flip in the market and then what do you do? Ends won't meet. Therefore, you have to take a lot of things into consideration so that you could make that calculation of that additional 4 million tons of sugar.
Only in well-capitalized mills and I would say that there are not very many of those, we'll be able to move forward with a project like this. I mean we have [indiscernible], São Martinho, et cetera, just a handful. So there is the possibility, but I don't think there is abundant capital or a good enough financial capacity on the part of the companies to do that. And then your first question was about cost evolution. Okay. What happens with the cost. The first half of the year, Thiago, in the first half there were several things that happened until the crop year because of rainfall, a lot of stoppages. So my unit cost was not totally diluted. My total crushing in this first half, we crushed 17 million tons of sugarcane when compared to 16 million tons of last year, which was 4% higher.
So we have sugarcane to reach 10%. So cost evolution will occur further down the road, a bit further down the road. But the main impact in the case of sugar that increases is, in fact, Consecana cost. If it were not for Consecana, this sugarcane cost with the same base should be falling by around 5% at least. Now in the case of ethanol, it doesn't go down more here, mainly because of Boa Vista because the Boa Vista's crushing will not be so good as we anticipated. The group is BRL 21.5 million, but Boa Vista cost will be a bit worse due to climate conditions and also due to our corn operation. Therefore, this harmed the ethanol cost as a whole for the group, and it doesn't fall by the same rate. So this is the main -- these are the main reasons.
But also because throughout the crop year, there were lots of things that happened. I mean, today, we can no longer take any more diesel credits, we bought today, BRL 400 million in diesel. São Martinho is one of the largest diesel buyers. I mean, we see other mills taking more credit to offset, but we can no longer take any more credit. And this increases my cost, I mean, by BRL 50 million. So there were other things. So when I talked about the initial cost that it was 5% lower at the end, if I extend the crop year a bit more. And I will do that. Usually, the crop year ends in November, but we will extend it for at least one additional week. So this extension in the crop year in my season will also imply an additional overtime and other costs. And because of that, my fixed cost is not so diluted. But in the order of magnitude in the case of sugar, it should remain at BRL 2,000. The sugar price for next year is 2,700. So we are talking about BRL 700 million for 1 million tons of sugar for our own cane.
Now ethanol for next year should be in line with this year, and this will depend on how much more sugar cane I crush next year to dilute the cost even more. Now the corn plant. At BRL 150 million of next year, the assumptions are the following: We can crush the total capacity of the plant, which is 490 tons of corn a year. Corn price, we buy at about BRL 50 to BRL 55 per bag, which is the current price. And DDGS price, I mean, we would sell approximately the same amount we are selling in this quarter. So corn is indeed very important. But obviously, the ramping up, I mean, going from 420,000 tons to 490,000 tons, this helps to get to that BRL 50 million in EBITDA.
Yes, that's very, very clear. The answers were very clear.
[Operator Instructions] Thank you. We now conclude the Q&A session. I would like to turn the floor back to Mr. Felipe Vicchiato for his final remarks.
Thank you so much for joining us today. I think we were able to address all the main aspects and points about this quarter and the crop year. If you have any additional questions, please let us know. Thank you.
The conference call of São Martinho is now concluded. We thank you very much for joining us, and we wish you a very good afternoon.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]