Category Archives: Ethanol

Brazil’s ethanol in demand at the expense of sugar production.

Brazil’s forecast for the 2012/13 cane crush is unchanged at 512 million tonnes of cane and 31 million tonnes of sugar according to Datagro.  These figures are for center south production of between 545 and 575 million tonnes of sugar cane.  The price and demand for gasoline will determine sugar output in the coming season with U.S. demand for ethanol a possible reason for increased ethanol output in Brazil as opposed to sugar.  The U.S. is likely to import 2.5 billion litres of Brazilian ethanol up from 1.5 litres.

Dry weather resulted in Brazil’s 2012/13 sugar forecast being reduced by 1.5 million tonnes in September due to dry weather and lower yields.  Gasoline prices and U.S. demand for ethanol are variables likely to be monitored for further changes to forecasts.  Also being monitored is a possible decision by Brazil to increase the ethanol content in gasoline from 20% to 25%.  This would increase ethanol production at the expense of sugar production.

The increased demand for Brazilian ethanol described above would account for approximately 35 million tonnes of sugar cane. Hence an equivalent reduction in sugar production may be anticipated.

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Sugar surplus puts downward pressure on prices

Surplus sugar continues to put downward pressure on prices as the Brazilian harvest gathers pace in the world’s largest exporter.  While Thailand is expected to export in excess of 7.5m tonnes in its 2012/13 season down slightly from last year.

The nearest month October raw sugar contract closed at 20.42 cents per lb while December white sugar closed at $574.50 per tonne.

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.

 

BNDES provides $593 million in loans to ethanol sector

BNDES of Brazil is to provide 1 billion Reais ($593 million) in credit to the ethanol sector over the next four years to fund development of technology.  The funding is to develop technologies in connection with  ethanol and cellulosic ethanol.  The move is seen as a bid not to lag behind North America in developing second generation ethanol technologies.

Brazil was the world’s largest producer of ethanol before being overtaken by the US.  Brazil primarily uses sugar cane as feedstock for ethanol while the US primarily uses corn.  The US now produces twice the amount of ethanol produced by Brazil.

The loans will be to fund research and are available from BNDES and FINEP, an arm of the Science Ministry.

Tereos invests $130 million in Brazilian natural sweeteners market

Tereos is seeking to expand into the natural sweeteners market in Brazil by investing $130 million in a starch factory with further investments possible.  The company seeks to tap into the fast expanding market that is evolving and becoming increasingly sophisticated, in the sense that the ingredients being used aim to improve the quality and property of food products resulting in lower use of calories and higher fibre content. The market is thought to be expanding by between 5% to 10%.

The Brazilian investment compliments the company’s sugar production in Brazil and allows it to further expand outside Europe.   In 2010 Tereos announced a joint venture with Malaysian Pure Circle to develop products made with natural sweeteners to compete with existing artificial sweeteners saccharin, aspartame and sucralose.

Cargill recently announced an investment in a corn processing mill in Brazil to produce starch and sweeteners.  Brazil’s Petrobras concluded a $1.2 billion deal with Tereos in 2010.

Tereos invested in Brazil’s sugar market a decade ago by establishing a joint venture which was followed by acquisitions and gradually increased market share.  Tereos is now Brazil’s third largest such group.

Brazil is the world’s largest exporter of sugar and responsible for more than 50% of sugar trades.

Brazil’s Center South to increase sugar cane output by 4%

Following the post of the 16th February concerning output of sugar cane from Brazil’s Center South rising to 575 million tonnes, the additional cane output is expected to result in an increase in sugar production by approximately 2 million tonnes to 35.5 million tonnes during the 2011/12 season and up from 33.5 million tonnes during the 2010/11 season. The cane diverted to sugar production as opposed to ethanol is likely to be 47% rising from 45%. The center south produces 90% of Brazil’s sugar and crushing for the 2011/12 season will commence in March.

 

Middle East tension and weaker dollar keep sugar market on edge

Protests have been broken up in Bahrain where two protestors were killed. The protesters are primarily from the Shiite majority. Protests are also planned tomorrow in Libya. Meanwhile Iran has announced that two of its war ships are to pass through the Suez Canal for the first time since 1979.  Israel has announced that it viewed the move as a hostile act.

Renewed tensions in the Middle East following the Tunisian and Egyptian revolutions, yesterday resulted in a sharp rise in the Brent crude futures contract which closed at $103.78 per barrel.  Rising oil prices provide ethanol and sugar futures with support and along with  a weaker dollar, with further dollar weakness expected, March raw sugar futures ended up 3% to close at 31.54 cents per lb.