Sugar may need to drop further to spur Brazil to make ethanol

Isis Almeida – Bloomberg, 02/14/2013

Sugar may need to drop further to spur millers in Brazil, the world’s largest producer, to make more ethanol at the expense of the sweetener when the 2013-14 season starts there in April, according to Macquarie Group Ltd.

Futures traded on ICE Futures U.S. in New York, down 7.6 percent this year, may need to average 17 cents to 18 cents a pound when sugar cane processing starts in the center south, Brazil’s main growing region, Kona Haque, an analyst at the bank in London, wrote in a report e-mailed today. Sugar for May delivery was down 1 percent at 18.02 cents a pound.

Millers in Brazil use raw material sugar cane to make both the sweetener and the biofuel. The price of hydrous ethanol, the 100 percent biofuel used in Brazil’s flex-fuel cars, climbed above that of sugar on Feb. 7 for the first time since April 2011, according to Kingsman SA, owned by McGraw-Hill Cos. That spurred speculation millers would make more of the biofuel.

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