February 19, 2007

High US corn prices unlikely to support sugar
 

High U.S. corn prices are unlikely to support world sugar values, according to a special focus released by the International Sugar Organization Friday.

Sugar cane in Brazil and corn in the U.S. are the world's two largest feedstocks used to make ethanol.

But even if continued strength in U.S. corn prices results in higher U.s. ethanol prices and thus creates demand for Brazilian ethanol, ISO said it would likely be "limited and short-lived".

ISO said much would depend on the rate at which corn prices might fall back when new crop supplies come available in autumn and the impact of expanding U.S. ethanol production capacity.

In 2006 U.S. ethanol prices rose to an extent that made Brazilian ethanol imports economically sound even with a $0.54 a gallon import tariff. ISO said this boosted Brazil's imports to the U.S. to 1.7 billion liters in 2006, up from 0.5 billion a year earlier.

ISO added that one billion liters of extra Brazilian ethanol represents 1.8 million tons of sugar.