Brazil's sugarcane producers are planning a major boost in ethanol production and fuel-alcohol exports amid robust international oil prices and stricter environmental regulations, officials and traders said this week.
The boost would come as fuel-alcohol contracts began trading in New York this month, establishing an "international reference price" for ethanol, said Antonio de Padua Rodrigues, technical director for Brazil's Sao Paulo-based sugarcane growers association, Unica.
Brazilian sugarcane growers expect to boost production of ethanol, which now accounts for just 30% of the alcohol products Brazil exports, Rodrigues said in a phone interview. Brazil will export about 1.5-bil liters of ethanol this year, up from 1.1-bil last year, he said. By 2010, Brazil expects to ship 5-bil liters, boosting exports of the cleaner-burning gasoline additive to Europe, Japan and China. Unica estimates Brazil, the world's largest sugarcane producer, could boost ethanol exports to as much as 3-bil liters/yr in the near term.
To boost exports to the US and bypass quotas on US imports of Brazil-refined fuel alcohol, Brazil is relying on operations in Caribbean countries to refine its hydrated alcohol into ethanol, which is then shipped to the US. Ethanol of Brazilian provenance accounted for about 100-mil liters in US imports in the last year, according to Unica. US company Cargill is building an alcohol dehydration plant in El Salvador to process Brazilian cane.
, and has drawn criticism from US farmer groups that produce most of the corn-based ethanol used in the US.
Rodrigues said Brazilian sugarcane producers are considering boosting investments in dehydration plants in Jamaica and Puerto Rico.
Brazilian traders said ethanol prices could rise as Japan is considerin plans to mix up to 3% ethanol into its gasoline, which would account for about 1.8-mil liters/yr of ethanol.
Ratification of the Kyoto treaty in Western Europe and Russia, which would require a 55% reduction in carbon gas emissions, could be an additional boon for Brazil's sugarcane producers. China already requires the mixing of up to 10% ethanol into its fuels in several provinces.
Brazil has about 24% ethanol in its gasoline, and Brazil's automotive industry is considering plans to build more vehicles that run on ethanol. The practice was common in the late 1970's, as Brazil, a crude importer, sought to decrease dependence on foreign oil. Brazil's government is currently seeking to implement a multi-billion dollar alternative fuels program to benefit producers of ethanol, biodiesel and other alternatives.Platt's Oilgram News:
