All About Alternate Fuel Vehicles (AFV)

By Carlos Caminada and Katia Cortes, May 31, 2007
Source: Bloomberg.com
http://www.bloomberg.com/apps/news?pid=20601086&sid=aMTdPkuJo7a4&refer=latin_america

May 31 (Bloomberg) — Sugarcane output in Brazil, the world’s biggest grower, will rise to a record in the current season after farmers increased planting to meet growing demand for ethanol, the Agriculture Ministry said.  Farmers will reap 528 million metric tons of sugarcane in the current harvest, up from 474.8 million tons last year, the ministry said today in its first estimate for this year’s crop.
Brazil, the world’s biggest maker of cane-based ethanol, is stepping up output of the fuel as more drivers buy so-called flex-fuel cars. Supply has grown faster than consumption, though ethanol use will likely catch up in coming months, said Plinio Nastari of Datagro.

“At the moment we have excess supply,” Nastari, head of the Sao Paulo-based sugar research company, said in a telephone interview. “This excess will narrow in coming months as cars consume more.”  Mills will produce a record 20 billion liters of ethanol from the current May-to-November harvest, up from 17.5 billion liters a year earlier, the ministry said today. Sugar output will rise to 31.3 million tons from 30.2 million tons.

Sugar futures for July delivery fell 0.03 cent, or 0.3 percent, to 9.34 cents per pound at 2:28 p.m. in New York, paring earlier gains of as much as 1 percent. The price has fallen 40 percent over the past 12 months as output climbs in Brazil, India and other major producers.  The price of sugar may decline in coming weeks as Brazilian mills speed up production to process the harvest that started last month, Nastari said. Rising demand for ethanol in Brazil and the U.S., the biggest importer of the fuel, will likely lead the price to rebound in a few months, he said.

Flex-Fuel Cars
Flex-fuel vehicles, which can run on ethanol, gasoline, or any blend of the two, account for more than 80 percent of new cars sold in Brazil. The total number of flex-fuel cars in the country will rise to as many as 4.2 million units this year from 2.6 million at the end of 2006, Nastari said.

Agriculture Minister Reinhold Stephanes said today he supports increasing the ethanol blend in gasoline to 25 percent to 23 percent. The government will likely set a new mandate in June, he said.  Brazilian fuel distributors have been required to mix 20 percent to 25 percent ethanol into gasoline for more than a decade. The government usually lowers the mandate at the end of the year, when the harvest is over, and raises it again in May or June as mills start back up.