News last update:6 Aug 2012

Datagro: Ethanol output raises commodity prices

More and more companies active in the food and feed business begin to express their concerns about the rising prices of raw materials for feed and food, due to the use of these ingredients for biofuel production.

Global ethanol production is driving up prices for food commodities, from feed stocks such as sugar, to meat, said Datagro, Brazil's biggest sugar-industry forecasting firm.


US production, forecast to increase more than 70% by 2012, will use 37% of the country's current corn supply to meet output needs, up 15% from 2006, Datagro said.


Land for soy crops is increasingly being diverted to grow corn, reducing the supply of soy and driving up the price of animal feed, according to the firm. In China, competing demand for corn from the food and ethanol industry may lead the country to reduce exports and become a corn importer, Datagro said.


"World sugar, meat, corn, soy and wheat are becoming more interdependent with ethanol," Plinio Nastari, president of Datagro, said at an International Sugar Organization seminar in London.


Government interest in biofuels, made from corn, sugar or vegetable oils, is motivated by a desire to replace fossil fuels, limit greenhouse gases and assist farming. Support programs are the main driver of industry growth, especially in Europe.


World ethanol production is forecast to total 34.5 million litere in 2006, representing 3% of global demand for gasoline, according to Datagro.

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