Petrobras cuts Brazil gasoline prices by near 10%; sugar prices tumble

In Brazil, Reuters reports that “Brazil’s state-controlled oil company Petrobras cut gasoline prices at refineries in the country by almost 10% on Thursday, the first cut since last week’s oil price collapse, a move that could boost sugar production and reduce ethanol output.”

The oil company, which has a near refining monopoly in Brazil, reduced gasoline prices by 0.16 real per liter, or 9.5%, and also cut diesel prices by 0.125 real per liter, or 6.5%.

This move makes retail gasoline more competitive against ethanol, possibly cutting the biofuel’s demand and prompting mills to switch production to sugar instead, said Claudiu Covrig, a sugar analyst at S&P Global Platts.

Gasoline and ethanol compete for driver preference at pumps, since most cars in Brazil can run on both fuels.

Ethanol demand grew strongly in the last two years due to its price advantage over gasoline. That led local mills to produce more of the biofuel and less sugar, a trend that could change now.