UNICA Says the Production of Ethanol in Brazil Diminished In Early July

Rio, Brazil- Brazil is one of the significant sugarcane producers. The Brazilian Sugarcane Industry Association (UNICA), one of the major Brazilian organizations for sugar and Ethanol, released a report showcasing the decline in production rate in the country. According to the data, Ethanol production was at 2.02 billion liters during the last part of June. A drop of 3.9% occurred in the market compared to the previous year. Brazil is the primary producer and exporter of sugarcane in the global market.

According to the experts, major Ethanol manufacturers diverted their production for biofuel till May. The critical factor behind the same is the rising demand for biofuel accompanied by the brisked prices. Concern regarding the degrading environment and increasing pollution pressurized the government officials to implement specific sanctions in the country. The government wanted to blend 27% of Ethanol with the fuel to cut down the carbon emission and decrease the government's dependency on petroleum and its by-products. The tables turned when countries like China successfully implemented a lockdown to control the rising infection. Demand from major exporting countries such as China, India, and the US declined, leading to the price decline in regional markets.

Furthermore, India is on track to becoming a significant Ethanol producing country in the international market. As a ripple effect, the Indian market displayed less demand from Brazil as the Indian manufacturers had sufficient inventories to cater to the domestic demand. Food services, disinfectants, beverages, and more are the sectors that remained active proportionally governing the market dynamics of Ethanol in the Brazilian market.

According to Antonio de Padua Rodrigues, the director of UNICA, the production of Ethanol is likely to grow in the upcoming months. Still, that number won't be enough to balance out the gap created in the past months. A new season may support the yield of corn and sugarcane in the Brazilian market, proportionally influencing the operational rate of Ethanol.

As per ChemAnalyst, the shortage of feedstock with the Ethanol manufacturers and less production became the governing factors for price decrement in the regional market. The demand from the cosmetics and food sectors also remained static in the international market, governing Ethanol market dynamics in the Brazilian market.