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Posted on  

August 30, 2001

Brazil Sugar - Substantial ethanol exports seen

Brazil could export around one billion liters of ethanol in 2002/03 (May/April), up sharply from forecasts of some 400 million this season, to reduce a growing sugar surplus, industry sources said on Wednesday.

The huge increase would hinge on a 10-12 percent growth in sugar cane production, firmer alcohol prices and exchange rates. Firmer world prices and a sharp depreciation of the real this year made sugar exports highly attractive for millers.

Ethanol exports would be destined mainly to Japan, South Korea and the Caribbean for processing and re-export to the United States.

"Ethanol exports would be one way of reducing a sugar surplus next season," said an official at the Sao Paulo Cane Agroindustry Union (Unica).

Millers and government officials estimated total sugar output at around 280 million tonnes in 2001/02 (May/April), of which 230 million in the centre-south region.

Traders see centre-south cane output climbing to 260 milion tonnes next season as the crop continues to recover from drought in 2000/01.

But the Unica official stressed that priority would be given to supplying the domestic market and noted that 56 percent of the sugar cane crop was being crushed into ethanol (alcohol) and 44 percent into sugar.

Last week sugar millers calmed government concern about a possible ethanol shortage during the December-april sugarcane inter-crop period.

Government officials were concerned that surging sugar exports in July, if maintained, would result in an ethanol shortage. However shipments are slowing this month with consumers well covered for the time being and expecting cheaper rates.

As a result the government maintained the ethanol blend in gasoline at 22 percent, dismissing calls to reduce it to 20 percent.

Hydrous alcohol is used directly as a fuel in specially designed vehicle engines. Anhydrous alcohol is mixed with gasoline in a 22/78 blend.

The price of anhydrous alcohol rose to 0.595 reais per liter in July, from 0.571 reais in June, but are 6.5 percent lower than a year ago, according to the Cepea economic institute in Sao Paulo.

Hydrous alcohol prices were little changed at 0.679 reais per liter in July, against 0.676 reais in June, but 7.7 percent down on a year-ago.

Industry sources said that although showers had fallen in Sao Paulo state during the past week, much more rain was needed to relieve the moisture deficit.
 

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