Brazil's ethanol industry is ready to meet demand for higher blends

Industry figures say that Brazil's ethanol producers are prepared to increase production if the government increases the legal blend of anhydrous alcohol?blended into gasoline this year from 30% to 32 percent. They also said that production was?on its way to a record. Brazil's government is aiming to increase the blend of ethanol and gasoline from 30% to 32% by the end of this year.

"It is a good time to make this decision because we are just starting the harvest... mills have not yet defined their 'production mix,'" said Mauricio Muuci, a consultant at Safras & Mercado.

Sugarcane would be processed into biofuels in Brazil if the ethanol blend was higher. Safras & Mercado estimated that the percentage of sugarcane being used to make ethanol would increase from 51% last season to 54% this year, a one-percentage point increase over its previous estimate following the minister's comments.

Safras & Mercado reported that with more cane being allocated to ethanol production and the strong expansion of corn based ethanol in Brazil, the total production could reach 44 billion to 44.5 billion liters, a record and approximately 15% higher than it was last season.

Unica, the sugarcane association and Unem, the corn-ethanol group, said that they are ready to increase their supply in response to a higher mandate for a higher blend. This would require 2 billion liters more of ethanol.

Unica said it does not anticipate supply problems in Brazil. It forecasts a?ethanol output of "the highest ever recorded volume" by 2026/27, with a growth of approximately 4 billion liters. Unem agreed, stating that corn-ethanol production alone is expected to contribute about 2 billion liters of the expansion forecast. The group believes that this amount would be enough to meet the needs caused by increasing the blend of ethanol in gasoline to 32%.

Thiago Scaf, Unem’s director of government relationships and sustainability, said: "In other words to meet this additional demand, half the growth expected from the sector (corn, sugarcane), in the harvest that is now starting, is enough." Reporting by Roberto Samora, Sao Paulo. Writing by Oliver Griffin. Editing by Edward Tobin.

(source: Reuters)