BRAZIL: Copersucar sees ethanol cutting sugar production by 5 million tonnes

Published: 03/12/2018, 7:14:10 AM

Brazil's Copersucar, the world's largest sugar merchant, expects output of the sweetener to fall by 5 million tonnes in the new centre-south cane crop that starts in April, as mills earmark more cane to ethanol production instead, according to Reuters.

Copersucar, who partners with Cargill Inc in the world's largest sugar trader Alvean, said mills in centre-south should allocate only 41.5% of cane to sugar production in the 2018/19 crop, compared with last year's 46.5%, as they move to increase ethanol output by 1.5 billion litres.

Brazilian mills are giving preference to ethanol production over the sweetener to take advantage of good prices and strong local demand. Ethanol is enjoying a large price gap compared with gasoline, leading owners of flex fuel cars to opt for the biofuel at pumps.

Copersucar projects 2018/19 centre-south sugar output at 31 million tonnes, 5 million tonnes less than in the previous season. It sees ethanol production at 27.5 billion litres, 1.5 billion litres more than last year.

The sugar cooperative, which controls U.S.-based ethanol trader Eco-Energy, expects a smaller crop in Brazil's centre-south, at 585 million tonnes, saying insufficient cane field renovation have led to old plantations that produce less. Its crop number means a reduction of 10 million tonnes of cane.

Ethanol sales are expected to help Brazilian mills amid a depressed global sugar market. A large sugar supply, with production increases in countries such as India, Thailand and the European Union, has held prices low. Some analysts in Brazil estimate ethanol to give returns around 25% higher than sugar sales.