Brazilian ethanol producers benefiting from consumers’ fear of inflation

In Brazil, ethanol producers are at last seeing the light at the end of the tunnel as inflation nearing 11% and cutting short-term spending sees drivers opt for ethanol rather than gasoline. And despite hydrous ethanol prices remaining at record highs for more than three months, drivers are not switching back to gasoline as they typically would when prices are above the 70% parity mark. Although in the end drivers may end up spending more by sticking with ethanol, in the short term the 25 cent per liter discount against gasoline is a stronger psychological driver.