⛏Sugar No.11 Futures
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Brazil's higher ethanol blend approval may divert cane to ethanol, reducing sugar supply.
Impact on assets 1
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Sugar prices settled higher on Tuesday after Brazil approved a higher ethanol blend in its gasoline, which could potentially boost ethanol demand and prompt Brazil's sugar mills to boost ethanol output at the expense of sugar. October NY world sugar #11 closed up 0.13, or 0.88%, and August London ICE white sugar #5 closed up 0.30, or 0.06%. Brazil's National Energy Policy Council approved a resolution that raises the mandatory blend of anhydrous ethanol in gasoline to 32% from the current 30%. Prices had tumbled to two-week lows on Monday amid an improvement in India's monsoon rains, with cumulative rainfall 19% below normal as of July 13, a substantial improvement from 42% below normal on June 30. Support also came from strength in crude oil prices, with WTI crude oil rising more than 1% to a one-month high, which benefits ethanol prices and could persuade global sugar mills to divert more cane crushing toward ethanol production rather than sugar, thus curbing sugar supplies.
Brazil's higher ethanol blend approval may divert cane to ethanol, reducing sugar supply.