BRASILIA: Mills in Brazil’s center south region are expected to produce 6 percent more ethanol in the 2018,19 season, which officially kicks off in April, reducing sugar output by a similar amount, according to some market estimates compiled by Reuters.
On average, the projections indicate sugar production of 33 million tonnes next year in the center-south, the world’s largest sugar producing region, compared to 35.2 million tonnes estimated by cane industry group Unica for the current season.
Rising gasoline prices in Brazil this year, as a result of a tax hike for the oil-based fuel and higher oil prices globally, increased a price gap with cheaper ethanol in local market, leading drivers to opt for the biofuel at the pump. In Brazil, most cars can run on either fuel.
The projections indicate a cane crush next year only slightly higher than this year at 590 million tonnes versus 585 million tonnes.
Most analysts think that strong dry spells during 2017 have negatively impacted the cane fields, which are also older than ideal due to insufficient renovation work.
“The weather factor has weighed on the forecast, combined with the ageing fields,” said Eduardo Sia, an analyst at sugar trader sucden.
