Brazil Sugar Outlook Has Fallen Due to Ethanol Boom

It is known that Brazil, the world’s largest sugar exporter, have more focused on producing ethanol, and become to the world’s second largest producer of ethanol. However, as most of Brazilian millers turn to ethanol, it is estimated that sugar production in the nation’s main growing region is now forecast to fall to a 14-year low.

Brazil is the world’s second largest producer of ethanol fuel, has been faced of depressed sugar price because India’s sugar export subsidies. So, a shift to ethanol, will allay global sugar price, and respond on government policies for boosting demand for biofuel as well. Conversely, Focusing on ethanol manufacture is seem to decrease sugar production

According to Unica, Brazilian Sugarcane Industry Association, was expected sugar output in the center south to fall by 5.7% year-on-year to 25 million metric tons, the lowest since 2005-2006. The information was collected from people who familiar with the matter, and not to be identified because the information is private. Then, Unica is now planning to present the new forecast to Brazil government committee that monitors ethanol supplies.

Brazilian millers have focused on producing the biofuel after bumper crops from Thailand to India left the global market oversupplied, sending prices tumbling. Raw sugar futures traded in New York have lost about 50% from a 2016 peak, causing pain for producers contending with a surplus and subsidies that have helped Indian millers export more of their output.

The figures give traders the first insight into the thinking of the industry group, which hasn’t publicly made any forecasts for the season, but choosing only to update the government on its estimates.

In sector of Ethanol premium will raise over sugar from a year ago. It is reported millers will crush 578 million tons of cane this season, about 1% higher than last year, the people said. That will come as a surprise for some traders, as Green Pool Commodity Specialists said last week that cane estimates seemed to be rising to 580 million to 590 million tons. The Brisbane, Australia-based researcher is also currently forecasting 581 million tons which is estimated that sugar cane is used for producing ethanol.

In addition, according to the Unica forecast, the sugar content in the cane is expected to drop 3.2% from a year earlier. For the estimation of Unica, the information of crushing, output and yields, will be published through the first half of August.