Brazil will likely step down to become the world's second-largest sugar producer on low global sugar prices and higher profitability and strong demand for ethanol, according to a report by Brazilian consulting company JOB Economia e Planejamento.
Market incentives for stronger ethanol production in Brazil, combined with expectations of an even larger bumper crop in India in the coming crop season, will likely make India the world's largest sugar producer, according to the report.
Brazil's commercial ethanol premium over domestic sugar has ranged from 4% to 40% since October 2017, a trend that is expected to continue for the foreseeable future, the report said.
India is expected to produce over 35.5 million tons of sugar during crop year 2018-19, which begins in October, according to the Indian Sugar Mills Association.
Brazil is expected to produce 2.7 million tons of sugar in the North-Northeast region and 27 million tons in the Center-South region, yielding 29.7 million tons of sugar for CY 2018-19, which runs from April-March in the North-Northeast region, and October-September in the Central-South region, according to the JOB report.
The CS Brazil production figures would be 9.1 million tons lower than the 2017-18 levels, according to the report.
Brazil is expected to produce 31.2 billion liters of ethanol in the same period, including 29.2 billion liters in the CS region. The expected ethanol production in the CS region would break the previous record of 28.2 billion liters set in 2015-16, according to the report.