Monthly Archives: July 2011

Brazil likely to lower ethanol mix in gasoline adding to sugar supplies

Brazil may announce that it is lowering the percentage of ethanol required to be mixed in gasoline.  The primary source of ethanol in Brazil is from sugar cane and if the requirement for 25% ethanol is eased to 18% this would free up sugar supplies that would have otherwise been diverted to ethanol production.

Sugar futures declined on the news. The news follows a reported drop in cane production in Brazil’s center south due to older ratoons and lower yields.

 

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ICE increases margins on No. 11 sugar futures

ICE today announced a 17% increase in its margin requirements for the No.11 raw sugar futures contract.  Effective from 11 July 2011 the new margin requirement will be USD 2,100 up by USD 300.

Brazil’s Center South sugar production lower than 2010/11 season

UNICA is expected to announce that sugar production in the Center South region of Brazil is expected to be lower than production during the 2010/11 season which amounted to 33.5 million tonnes.  Production is therefore short of the 35 million tonnes estimated by the market for the 2011/12 season.

The news sent sugar prices soaring to achieve the highest daily gains of 2011 as Brazil approaches peak harvest season.  Older cane ratoons, dry weather in the second half of 2010 and higher sugar prices encouraging delays in replanting and use of older ratoons resulted in lower sugar yields.  The Center South produces most of Brazil’s sugar.