With the beginning of this year’s Brazilian sugarcane harvest in March, price adjustments for ethanol have begun – very slowly in most cases.
Sugarcane growers have seen what they get for the equivalent of a liter of ethanol drop from 44 cents (0.90 real) to 42 cents (0.86 real) since December.
But prices at the pump, for the final consumer in the city of São Paulo, remain at a high 82 cents (1.68 reais), up from 63 cents (1.29 reais) in December.
São Paulo is located in Brazil’s southeast region where 85% of Brazil sugar and ethanol are produced.
Brazil’s sugar mills operate exclusively with sugarcane and presently produce two kinds of ethanol: anhydride (water free), which is added to gasoline, and hydrated (with water), which is used in new fuel-flex cars and older ones that run only on ethanol. The mills also produce sugar.
The sugar-ethanol trade association (Unica) reports that this year over 87% of all the ethanol produced in Brazil will be used domestically and the remaining 12% will be exported.
In the case of sugar, the situation is exactly the opposite: around 70% of sugar production will be exported and the rest used domestically.