SAO PAULO: Brazilian sugar mills are considering increasing their raw sweetener output at the expense of ethanol for automobile fuels after sugar futures surged to a two-year high this week, according to analysts.
Raw sugar futures for March delivery in New York have climbed 9.1% since Jan 2 after news of output declines in producers such as Thailand raised supply concerns amid an expected global deficit for the 2019/20 crop year that started in October.
Willian Hernandes, a partner at FG/A, a consultancy that advises mills in Brazil’s sugar belt on their commercial strategies, said the price jump has mills considering changes to their production mix, or the amount of sugar cane a plant will dedicate to raw sugar versus ethanol, once the Brazilian crop season begins in April.
Brazilian mills will post an all-time low production mix for sugar this season with only 34% of the cane used to produce the sweetener with the rest going to ethanol as demand and prices for the biofuel have increased.
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