The price gap between ethanol and sugar would likely reach its biggest level in 12 years as a result of Petrobras’ fuel price change. The change will have no impact on the production strategy of Brazilian sugar and ethanol producers as they start a new season since they are already planning to make as much sugar as possible, and consequently less ethanol. Brazil mills have relative flexibility to shift raw material sugarcane to make sugar or ethanol, depending on market prices. According to Czarnikow, the gap between prices of sugar and hydrous ethanol for Brazilian mills reached USD 11.34 cents per pound, the highest since 2011.
Source: Reuters (*Translated by Ia Niani)