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April 8, 2011

Brazil Expected to Increase Sugar Production More than Ethanol

The Union of Sugarcane Industries in Brazil (Unica) announced last week that their members intend to produce 25.5 billion liters of ethanol and 35.5 million tons of sugar during the 2011/12 harvest season, which would represent an increase of 0.5% and 3.2% respectively. The total sugarcane tonnage processed by the member industries is estimated at 569.5 million tons, which is 2% less than in 2010/11. Unica is an organization made up of sugarcane growers and processors in southeastern Brazil where the vast majority of Brazil's sugarcane production is located. Conab has not yet published an official estimate of the entire 2011/12 Brazilian sugarcane crop including ethanol and sugar production.

Of the total estimated ethanol production in southeastern Brazil, 17.2 billion liters (67% of the total) will be hydrous ethanol sold as E100 in Brazilian gas stations. Approximately 8.3 billion liters (33% of the total) will be anhydrous ethanol which is blended into gasoline to be sold as E25 in Brazil.

Ethanol exports from Brazil in 2011/12 are expected to decline 18%, which would increase the amount of ethanol available for the domestic market by 500 million liters. Even with the expected increase in the supply of ethanol for the domestic market, the demand is expected to increase even more due to the continued strong sales of flex fuel vehicles in Brazil. Over 90% of all the new automobile sales in Brazil are flex fuel vehicles.

The amount of sugar produced by the members of Unica is expected to increase 1.1 million tons, but exports are expected to increase on 0.6 million tons to 24.9 million.