A sugarcane subject in growth stage is seen at a farm in Jacarezinho, Brazil January 1, 2019. REUTERS/Marcelo Texeira/File Photo
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NEW YORK, May 11 (Reuters) – Global commodities dealer Louis Dreyfus projected on Wednesday that Brazilian mills will divert a larger-than-expected quantity of sugarcane to ethanol manufacturing due to excessive power costs, inflicting a discount in world sugar provides.
Dreyfus sugar director Enrico Biancheri mentioned through the Citi ISO Datagro sugar convention in New York that Brazil’s center-south (CS) mills would produce solely 29 million tonnes of sugar within the new season that began in April, a view that may be within the low finish of analysts’ estimates to date.
“At current prices the world is heading to a shortage of sugar, due to a ethanol-oriented crop in Brazil,” Biancheri mentioned, including that sugar costs will want to rise to a premium over ethanol costs to trigger a rise in sugar manufacturing.
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Brazil mills have sure flexibility to change cane allocation to sugar or ethanol, relying on market costs. Due to excessive power costs, there was an expectation within the sugar market that mills would shift some cane to ethanol, however Dreyfus sees that shift as extra drastic.
As a comparability, U.S. dealer and analyst StoneX projected on Tuesday that Brazil CS mills would produce 33.9 million tonnes of sugar, close to 4 million tonnes above Dreyfus’ estimate.
Biancheri mentioned that ethanol gross sales are presently giving mills a monetary return that may be equal to a sugar value of 20.18 cents per pound. Sugar was buying and selling on Wednesday on ICE at 18.54 cents/lb.
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Reporting by Marcelo Teixeira; Editing by Franklin Paul and Will Dunham
Our Standards: The Thomson Reuters Trust Principles.
Dreyfus sees larger Brazil shift to ethanol, warns of sugar shortage & More Latest News Update
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