Brazilian sector should keep expanding

For the Brazilian 2008/09 sugarcane crop, the Sao Paulo Sugar Cane Agroindustry Union (Unica) forecasts a production at 446 million tons in the Center-Southern region, volume 4.7 percent higher over the previous season. It should be produced 20 billion liters of ethanol, considering the new 30 mills that will start to operate - each one processing, on average, 700 thousand tons of sugarcane.

Regarding ethanol prices, the Unica bets on values a little different over those practiced in this crop. Moreover, if the prices received by growers keep low in the next season, the year of 2009 should be marked by adjustments in the ethanol supply and demand.

Perspectives on the demand are positive. In 2007, it was traded 2.3 million of vehicles, according to the official search, enlarging 28 percent over 2006 - the best performance since 1997.

The Association of Vehicles Manufacturers (Anfavea in Portuguese) shows that 91.1 percent of the total of cars (excluded commercial ones, trucks and buses) traded from January to November 2007 were flex-fuel. For 2008, it is expected that the sector keeps increasing. It is forecast a significant increase of 19 percent in the year

According to the Ministry of Agriculture, ethanol inventories are forecast at 1 billion liters on April 1st 2008 - end of off-season period.

From January 7th to 11th, Brazilian ethanol prices decreased for the fifth consecutive week. Some mills, in need of cash, traded at lower values. The CEPEA/ESALQ (Sao Paulo state) for anhydrous averaged 0.79915 real or 0.45422 dollar per liter (excluding taxes), dropping 3.3 percent compared to the previous period. For the hydrated, the decrease was of 2.9 percent, at 0.71187 real or 0.40461 dollar per liter. In general terms, the volume traded was even lower over the previous week.

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