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Brazilian ethanol gets a sweet source

24th April, 2008

Sugar mills in Brazil's major producing region will turn a record 58% of this year's sugarcane crop into ethanol as rising oil prices generate demand for alternative fuels.

Ethanol production in Brazil's central south region, which accounts for more than 80 % of the nation's output, will increase to 24.3 billion litres (6.4 billion gallons) this year from 20.3 billion litres last year, the Sugar and Ethanol Industry Association says. Last year, 56% of the crop was processed into fuel, up from 51% in 2006.

Brazil's increasing number of flex-fuel vehicles, which can run solely on ethanol, petrol or any blend of the two, is also increasing sales of the fuel.

'Most new projects are focusing on ethanol,' Antonio Padua, technical director at Unica, comments. 'The best product for the industry has been ethanol sold on the domestic market.'

Rising ethanol prices in the US, the world's largest consumer of the fuel, will encourage Brazilian mills to export more this year, Padua says. The price of approximately $2.70 (€1.71) a gallon is above the $2.50 that makes exports to the US profitable for Brazilian mills.

Ethanol exports from the central-south in the crop year that started this month will rise to 3.9 billion litres, up from 3.1 billion litres. Brazil's direct exports of ethanol to the US in this crop year will likely grow by about 300 million litres. Shipments were 766 million last year.