Brazil’s expansion of corn-based ethanol is altering the economics of sugar-cane processing: the cheaper corn-ethanol route is making sugar-cane ethanol less competitive, causing cane processors to shift more of their crop toward sugar rather than ethanol.
Because more cane is being used for sugar production and corn ethanol is growing fast, global sugar supplies are expected to exceed demand by around 2.8 million metric tons in the new marketing year — contributing to the biggest annual fall in sugar prices since 2017.
Corn ethanol in Brazil is rapidly scaling: estimates show corn-ethanol may account for ~32% of the country’s ethanol production in the upcoming season, up from ~23% currently.
This shift is putting pressure on processors: shares of major sugar-cane processors like RaĂzen S.A. have dropped ~56% this year as sugar prices weaken.
