Brazil Ethanol Output Seen Jumping 14% on Fuel Blend

Ethanol output in Brazil’s Center South, the world’s largest sugar-cane producing region, will rise 14 percent this year as the government is set to boost the mandatory amount of biofuel blended into gasoline, a major producer said.

Mills will likely make 25 billion liters (6.6 billion gallons) of ethanol from the coming sugar-cane crop, up from 22 billion last year, said miller Grupo Maubisa’s founder and chief executive officer, Maurilio Biagi Filho, the world’s second- biggest individual sugar-cane grower. Brazil is considering raising the amount of ethanol mixed with gasoline to 25 percent as early as May from 20 percent now, a government official familiar with the plan said last month.

“We’ll produce more ethanol because of the increase in the blend,” Biagi said in a telephone interview from Ribeirao Preto yesterday. “The mixture is returning to the level of two years ago.”

Center South mills will process 570 million metric tons of cane in the harvest that starts in March, about 11 percent up from a year earlier, Biagi said. Sugar output will likely match production in the current season as mills turn more cane into ethanol to meet rising demand, he said.

The higher cane production “will have to be transformed into ethanol,” Biagi said. “There’s a lot of sugar supply so the tendency will be that prices fall.”

Brazil is the world’s largest ethanol producer after the U.S. Brazilian mills make the fuel from sugar cane, while U.S. producers make it from corn.

Brazil’s Center South, which produces about 90 percent of Brazil’s sugar and ethanol, made 34.1 million tons of sugar this harvest, up 8.8 percent from the previous season, industry association Unica said Jan. 10. The region’s sugar-cane crop rose 7.7 percent to 531.3 million tons and ethanol output climbed 3.6 percent to 21.3 billion liters.

Harvesting in the region usually runs from March to December.

To contact the reporter on this story: Stephan Nielsen in Sao Paulo at snielsen8@bloomberg.net

To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net; James Attwood at jattwood3@bloomberg.net

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