Sugar Output in Brazil’s Center South May Climb 8%, ISO Says

Sugar output in Brazil’s main producing region may climb about 8 percent in the current crop year as more cane is used to make the sweetener instead of ethanol, the International Sugar Organization said.

Production in the Center South may advance to 36.2 million metric tons in the 2011-12 crop year started in April from 33.6 million tons in the prior period, Leonardo Bichara, a senior economist at the London-based ISO, said by phone today. The portion of cane directed to sugar production will increase to 48 percent from 45 percent, he said.

“Sugar production will rise, as demand for ethanol will be stable,” Bichara said.

Production of the biofuel will decline 3.6 percent to 24.39 billion liters (6.4 billion gallons) from 25.3 billion liters in the previous period, the ISO estimated.

“The price of ethanol in Brazil will continue to be capped by the price of gasoline in the country, while sugar prices may rise depending on market conditions,” Bichara said. “Exports of the biofuel will also fall.”

Brazil is the world’s largest producer of sugar.

source: bloomberg