Brazil's sugar and ethanol sector to come under pressure

07.08.2013

Brazil's sugar industry is giving priority to ethanol this year, much of which is destined for the fuel sector while supplies for renewable chemicals are also likely to increase. The flexibility of mills which allows the sugar and ethanol industry to switch between the products has rarely been more apparent than this year when the output of sugar will stagnate, while that of ethanol is shooting ahead. However, there is growing concern that there will be little or no spare crushing capacity next year, so stocks of uncut cane could accumulate. More than the current measures will be needed for companies to start building the 100 or so large new mills essential to process the additional 40 mln tonnes of sugar, which will be needed for Brazil to maintain its 50% share of all the sugar traded worldwide in 2020. Concerns by the local sugar sector also refer to the government's stance on future energy supplies and new regulation lowering crushing margins for the sugar sector. However, some relieve for the sector may arise from cellulosic ethanol production, new outlets in the chemical industry and improved logistics.


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