Brazil ethanol, sugar mills miss the commodity boom

SAO PAULO (Reuters) – Record ethanol consumption in Brazil, surging exports of the biofuel to the United States and a recovery in sugar and ethanol prices will not be enough to pull local mills’ margins out of the red, producers said.

Sugar and ethanol prices have started to improve since December as investment fund buying stormed into commodity complex after a gloomy period of low profitability mainly due to a huge global surplus of sugar.

But this will be offset by a strong surge in costs and the local currency against the dollar, and new investments in production in the world’s top sugar and second largest ethanol producer, are unlikely under current market conditions.

Reuters UK