Back to Main Brazil's Ethanol Squeeze

• Published: 2010-02-09 18:52:28

  Sugar prices have recorded some impressive gains in the last 6 months. It is thought that strong pricing for sugar will continue for 9 months, due to a global shortage of sugar. It is thought that new season deficit could be as high as 7mmt.
  
  These strong prices could lead to Brazil importing ethanol from the US. Currently US ethanol is prices at $300/cubic meter below Brazil’s ethanol price. This discount would more than cover the duty, taxes and freight associated with transporting the ethanol to Brazil.
  
  Ethanol specifications differ between the two countries – in water and gasoline content – which would require a change to Brazilian specifications of ethanol to allow US ethanol to be imported and used. If this change was to be legislated it would be a lengthy process, and there is every chance that by the time it was enforced sugar prices would have fallen.
  
  US ethanol entering Brazil would be positive for corn prices, and for ethanol producers. Ethanol producers could be very busy in the coming year, given the recent decision of the EPA to ratify corn based ethanol production as a green fuel. It needs to be questioned how green that fuel remains after it is shipped across the seas.
  

  Tags: Feature Daily Article ,  Commodities , 

  

  Supplied by ProFarmer Australia