Ethanol: Longer-term outlook brightens despite a temporary drop in blend

Overview

Soaring ethanol prices at the end of Brazil’s main centre-south sugarcane harvest prompted the government to announce on 11 January a temporary reduction in the ethanol mix from 25 to 20 per cent in all gasoline for 90 days starting 1 February. Despite mixed market reaction to this government intervention, the move should ultimately have marginal impact on the balance sheets of Brazil’s top ethanol and sugar companies since producers can easily convert additional stocks of anhydrous...