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Brazil ethanol prices fall as cane crushing gathers pace

SAO PAULO - Brazil ethanol values fell almost 5 percent last week, the largest weekly drop so far this year, as more mills joined the early start to the 2016/17 center-south cane crop, think-tank Cepea/Esalq said on Monday.

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SAO PAULO - Brazil ethanol values fell almost 5 percent last week, the largest weekly drop so far this year, as more mills joined the early start to the 2016/17 center-south cane crop, think-tank Cepea/Esalq said on Monday.

Hydrous ethanol index for Sao Paulo state, Brazil's largest fuels market, fell 4.7 percent last week compared to the week before to 1.842 real per liter ($1.92 per gallon).

Cepea said in a report on Monday that fuels distributors are refraining from buying large ethanol volumes in the market, securing only enough supplies for a few days, since they expect prices to fall further as more cane is processed.

Brazil's cane industry group Unica expects some 170 mills out of almost 300 in the center-south to be crushing by the end of March, compared to 75 mills earlier in the month.

The new crop is expected to be record at around 620 million metric tons of cane, versus 605 million in 2015/16.

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Mills carrying large debt loads usually prefer to produce more ethanol than sugar early in the crop, since the fuel generates quicker cash flow.

But Cepea said sugar sales are currently giving larger returns to mills than ethanol deals. 

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