World Ethanol Demand to Test Brazil Cane Industry

SAO PAULO – Brazilian sugar cane mills, the world’s top producers, have visions of motorists from New York to Tokyo filling their tanks with ethanol, making the biofuel a full-fledged world commodity and making local producers as rich as Saudi sheiks.

But many observers doubt Brazil’s ability to become a reliable international ethanol supplier. A disappointing cane harvest and thin ethanol stocks have helped lift sugar prices to 25-year highs, and the government has demanded price caps on the fuel.

Mills are struggling to build adequate fuel stocks to keep local prices from spiking. Any surprise such as a drought in the main cane-growing region would only exacerbate the problems.

The International Energy Agency said ethanol could make up as much as 10 percent of the world’s gasoline mix by 2025. US President George W. Bush is looking to wean the United States off its dependence on oil imports by boosting production of energy alternatives including ethanol.

Reuters