Fuel pricing change likely to increase price gap between ethanol and sugar

The price gap between ethanol and sugar is likely to be the highest in 12 years after the change in fuel pricing by Brazil’s state-controlled oil company Petrobras PETR4.SA, said analysts and brokers, reports Reuters.

The changes made in policy on Tuesday will not affect the production strategy for sugar and ethanol producers as they are planning to increase sugar more than ethanol this season, they said.

The price for sugar is the highest in 11 years hence the mills are focussing on increasing sugar production, said a U.S.-based sugar broker.
Mills in Brazil are flexible to produce ethanol as well as sugar depending on the market demand and prices.

The gap between prices of sugar and hydrous ethanol for Brazilian mills reached the equivalent of 11.34 cents per pound, the highest since 2011, said broker and supply chain services provider Czarnikow.


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