Brazil to import 1.5bn litres of ethanol in 2011 - consultant

10 August 2011 18:42  [Source: ICIS news]

HOUSTON (ICIS)--Brazil will need to import 1.5bn litres of fuel ethanol in 2011 to meet its own domestic demand, Brazilian consulting firm Datagro said on Wednesday.

The projection indicates a significant shift in the role Brazil has played in the global ethanol market, as the country is now relying on fuel ethanol imports after leading the world in exports of the biofuel.

According to Datagro, the 1.5bn litre projection for 2011 includes some 300m litres that Brazil already imported between May and July.

A separate consulting firm this week was quoted in the Brazilian press as saying Brazil would continue to import gasoline and ethanol during the next four years.

Brazil's policy of controlling gasoline prices to keep inflation in check has put a cap on ethanol prices and that is limiting investments needed to expand sugarcane production, the group was quoted as saying during an industry event in Sao Paulo.

Brazil resorted to imports of ethanol earlier this year for the first time in several years to avoid a potential shortage of anhydrous ethanol, which Brazil blends in gasoline at a mandated 25%.

Ethanol supply has increased since the start of Brazil's main sugarcane harvest in April, but a drop in sugarcane production so far this year has raised concerns that local ethanol production alone will not be enough to meet demand.

According to sources, ethanol supply could tighten further in the coming months because of a smaller-than-expected sugarcane harvest in the key centre-south region.

Total sugarcane crushing from the beginning of the harvest on 1 April to 16 July totalled 217.4m tonnes, down by nearly 15% from 255.2m tonnes processed over the same period in the previous harvest, industry association Unica said in a recent crop update.

Unica represents most sugarcane mills in the centre-south, which accounts for around 90% of Brazil's ethanol production.

The group, which is scheduled to release new crop figures on Thursday, blamed the reduction in the crop on bad weather, citing frost in some regions of Brazil this year and a prolonged drought in 2010.

In 2010, the centre-south produced an estimated 557.0m tonnes of sugarcane, but Unica estimates that number will drop by 4.2% to 533.5m tonnes in 2011.

Datagro has predicted an even smaller crop, projecting sugarcane production will drop by 7.1% to 517.4m tonnes.

The group warned that the final crop figure could be even lower because the projection did not take into account possible damage caused by frost in early August.

A large Brazilian producer in the centre-south concurred, saying production in the region may actually not even reach 510m tonnes.

"It is looking ugly … honestly if we get to the 510m tonne figure it would be a reason to celebrate," the source said.

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