NASHVILLE, Tenn. (RFD-TV) — Global sugar markets are seeing a shake-up, and it is all tied to ethanol production. Market analyst and friend of the show, Shawn Hackett, says Brazil’s shifting use of crops for biofuel production is a significant factor.
“One of the big demand factors in Brazil is ethanol from sugar, and in the last few years, because the price of corn got so undervalued that it’s actually much, much cheaper to produce ethanol out of corn than it is out of sugar,” Hacket said. “And so, all of the corn that they possibly can utilize to make ethanol is being utilized, so demand for corn-based ethanol is going through the roof.”
The dip in corn prices, followed by a rise in demand, is putting sugar in a pinch.
“The sugar processors are now trying to make as much sugar as possible, and they’re reducing that demand for ethanol, and that is significantly changing the equation of how much importable supplies they have to the open market,” Hackett explained. “That’s been really hitting sugar prices pretty hard, and that’s a big structural change that, until corn prices go up, sugar prices could be in an oversupply.”
Experts say farmers and ethanol producers would benefit from a risk-based ILUC system that protects forests without relying on speculative modeling.
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