World ethanol 2010.

World ethanol production is forecast to grow only moderately in 2011. For Brazil, the 2010 drought is forecast to result in a below-average rise in output. In the Northern Hemisphere, relatively high grain prices will mean that alcohol is likely to be sold at a premium to gasoline. Therefore, production is likely to be restricted to the volumes required by captive markets. High sugar values will mean that the absolute cost advantage which worked in favour of cane-growing countries won't play too much of a role in 2011 either. While demand in Brazil will continue to increase, the amount of alcohol sold on the world market will stagnate or even fall. This trend will be compounded by the fact that the new set of sustainability regulations may act as non-tariff barriers to trade. Moreover, distillers may be well advised to prepare for another attack from the food versus fuel campaigners. At the same time, the consolidation phase may come to an end and it may again become more attractive to build new plants than take-over existing assets.