Brazil, the world’s top producer of sugar cane, is feeling the effects of consecutive years of a global sugar glut, and these effects may be compounded for the country’s ethanol industry by the notable drop in oil prices. Brazilian ethanol producers have increased production to help alleviate the downward pressure on sugar prices. Since Brazil’s harvest in April, mills have allocated 56.1% of their cane to the production of biofuel compared to 54.7% at the same time last year. However, as gasoline becomes cheaper, ethanol production will likely decline, forcing more sugar onto an already saturated market. Some industry analysts expected higher gasoline prices following the country’s national elections, but Brazil’s state-controlled oil company, Petroleo Brasileiro SA is subsidizing gasoline forcing ethanol producers to reduce prices in order to remain competitive.
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