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Brazil Sugar Mills Use Most of Record Cane Crop to Make Ethanol

Sugar mills in Brazil’s Center South, which make about 40 percent of global exports, processed the most of a record cane crop into ethanol after prices for the sweetener plunged.

Ethanol production consumed 54.6 percent of the sugar cane reaped this season through December, when most harvesting ends, up from 50.4 percent a year earlier, industry group Unica said today. Ethanol output jumped 19 percent to 25.4 billion liters (6.7 billion gallons), while sugar production rose 0.6 percent to 34.3 million metric tons.

Sugar futures in New York have slumped 50 percent in three years after global output led by Brazil surged to record levels. The plummeting prices, which are below production costs for most mills, will probably prompt them to repeat the focus on biofuel this year, sugar-industry researcher Job Economia & Planejamento’s head, Julio Maria Borges, said.

“The next crop should start with a bias toward ethanol,” Borges said by telephone from Sao Paulo.

The record 594.1 million tons of sugar cane crushed by mills through December was 12 percent higher than a year earlier, Unica said.

Output exceeded about 590 million tons of sugar cane and 34.1 million tons of sweetener estimated for the entire season by Unica director Antonio de Padua Rodrigues on Dec. 17.

Harvesting for the current season is practically concluded and only a few mills will continue to crush sugar cane in coming weeks, with a “marginal production,” Padua said in Unica’s statement today.

The number of mills operating this month is expected to drop to 12 from 115 in the second half of December, Padua said.

Sugar futures last week touched the lowest price in 42 months on improved outlook for output in Thailand, Australia and India. Contracts for delivery in March fell 0.8 percent to 15.47 cents a pound at 12:40 p.m. in New York.

To contact the reporter on this story: Gerson Freitas Jr. in São Paulo at gfreitasjr@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net

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