Sugar mills in Brazil are diverting more cane towards ethanol production to cash in on high energy prices and cancelling sugar export contracts, reports Reuters.
A trader associated with the international commodities merchant told a news agency that the export contracts for 200,000 tonnes to 400,000 tonnes of raw sugar have been cancelled and almost every sugar trading firm in Brazil is engaged in it.
During peak season Brazil exports around 2.2 million tonnes of sugar per month and the increase in cancellation of contracts would lead to a shortage in global sugar, said some traders.
Most of the sugar mills in the country can produce sugar as well as ethanol due to their flexibility and they are now more focused towards ethanol production.
