The chief executive of Brazil’s Raízen, the world’s largest sugar maker, on March 14, 2022 said state-run oil company Petrobras’ increase in fuel prices was necessary to avoid shortages and said they could rise rise further.
Raízen is Brazil’s largest producer of ethanol from sugar cane, which competes with gasoline to fuel the country’s large fleet of flexible-fuel cars and motorcycles.
Petrobras raised gasoline prices by 18.8% last week and diesel prices by 24.9% despite political pressure to contain them. Brazilian president Jair Bolsonaro has criticised the increases but said he would not interfere with pricing policy.
“It was a necessary move from Petrobras otherwise Brazil has some situation of shortage of fuels,” Raizen CEO Ricardo Mussa said on the sidelines of a sugar industry event in the United Arab Emirates.
He added there appeared room for a further increase in fuel prices in Brazil based on volatile international markets.
Russia’s invasion of Ukraine on Feb. 24 led to a surge in global oil prices. They hit their highest since July 2008 a week ago, but have retreated over the last few days.
Mussa said Brazil had traditionally provided a supply cushion for the sugar market in times of shortage but strong demand for ethanol linked to the country’s renewable energy programme would limit its ability to do so in the future.
Global sugar prices rose by more than 20% in 2021, recording a fourth consecutive annual increase, and have continued to climb so far this year.
“Not many companies understand yet how sugar is structurally changing its price because of what’s happening globally,” Mussa said, adding he hadn’t seen additional sugar capacity coming online but demand was continuing to grow.