Brazil, the biggest ethanol producer after the U.S., will have to import the biofuel if authorities raise the mandatory level mixed into gasoline this year, according to commodity processor and trader Bunge Ltd. (BG)
“Unfortunately, mills just won’t be able to meet demand if the blend is raised this year,” Pedro Parente, chief executive officer for Bunge in Brazil, said in an interview yesterday in Sao Paulo. “We would have to get the ethanol from the U.S.”
Passenger cars in Brazil run on a mix of 20 percent anhydrous ethanol and 80 percent gasoline. The country is considering increasing the percentage of ethanol, Energy Minister Edison Lobao said Aug. 17. That would benefit state- controlled Petroleo Brasileiro SA (PETR4), which has been importing gasoline to meet rising demand in Latin America’s largest economy.
Growers in Brazil’s center south, the world’s largest producing region, will harvest at least 509 million metric tons of cane in the crop year that started April 1, from 490 million tons last season, Parente said. Rainfall in May and early June delayed the harvest and lowered sucrose yields, he said.
Bunge, based in White Plains, New York, is looking into expanding its logistics assets in northern Brazil, the new “agricultural frontier,” Parente said. Brazil is set to become the world’s largest producer of soybeans, overtaking the U.S., where the worst drought in 56 years wilted crops.
“We are paying a whole lot of attention to this,” Parente said, declining to give the timing or amounts of investments.
Brazil probably will plant a record soybean crop this year amid record prices for the oilseed, he said. Most of the output increase will come from improved crop yields, as farmers are using more fertilizers, and an expansion into cattle pastures, he said. Soybean prices have jumped 44 percent this year.
Bunge owns 11 terminals in eight ports in Brazil.
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