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Brazil cuts center-south cane ethanol estimate

31 Aug 2011, 3.45 pm GMT

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Sao Paulo, 31 August (Argus) — Brazilian government crop supply agency Conab lowered its 2011-2012 season estimate for sugar cane production and ethanol output from the main center-south growing region, as bad weather and underinvestment continue to trim milling results.

The region is now forecast to crush 519mn t of cane, down 9.4pc from Conab's initial May forecast of 573mn t. Brazil harvested 560mn t in the 2010-11 season.

The center-south, which accounts for 90pc of Brazil's cane, will produce 21.5bn liters of ethanol, down 16pc from the 25.6bn l produced from the previous crop, Conab said.

Anhydrous ethanol will account for 8bn l, up 12pc from the 7.1bn l produced the season before, as mills favor the production of the fuel additive that gets blended into all domestic commercial gasoline. The government earlier this week lowered the mandatory blend of anhydrous to 20pc from 25pc — where hit has been in recent years — because of short supplies and the impact of high ethanol prices on overall fuel prices.

Hydrous ethanol output will reach 13.5bn l this season, Conab said, a 27pc from the 18.5bn l produced last season.

The high price of sugar has kept mills allocating as much cane as their capacity will permit to production of the sweetener. The government cap on the price of gasoline, with which hydrous ethanol competes, has squeezed the profit margins after ethanol production costs have risen steadily in recent years.

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