Sugar merchant ED&F Man said on Monday it expected at least 54 percent of the 2007/08 centre-south Brazil cane crop to be used to make ethanol bifocal, and the rest for sugar.
"The consensus for the season is moving from a 53 percent vs 47 percent ethanol/sugar ratio to 54 percent vs. 46 percent or perhaps higher," London-based Man said in its monthly report for June.
A 54 percent ethanol allocation would mean that centre-south Brazil sugar output would be 26.6 million tonnes and ethanol production would be 19.0 million cubic metres, Man said. "This said, the industry could maintain a higher ratio. The key determinant apart from cash flow issues, will be the price relationship of ethanol relative to sugar," it added.
Man forecast that ethanol exports from centre-south Brazil would stand at 2.9 million cubic metres, down from 3.3 million last season. "To date exports have been limited, largely due to the lack of competitiveness vis-à-vis US ethanol," Man said.
"With the US expected to import significantly less than the 2.8 million cubic metres last year, alternative destinations will be needed," it added. ED&F Man said it anticipated a damp outlook for sugar prices in the medium term due to big supplies in Brazil, the world's biggest sugar producer, and India, the leading sugar consumer.