Expected sugar price plunge may stimulate ethanol production

In Brazil, analysts predict that the global sugar surplus will halve by next season. Says Jonathan Kingsman, managing director of Laussanne-based consultancy Kingsman SA, “This may be through a fall in world prices big enough to persuade millers in the centre-south of Brazil to produce more ethanol and less sugar.” Estimates place “ethanol parity”– the sugar price that would incentivize mills to convert cane to ethanol instead of sugar– at 19-21 cents per pound.