São Paulo, 5/9/2006 (Agência Brasil - ABr) - With the beginning of this year's sugarcane harvest in March, price adjustments have begun - very slowly in most cases.

Sugarcane growers have seen what they get for the equivalent of a liter of ethanol drop from R$0.90 to R$0.86 since December. But prices at the pump, for the final consumer in the city of São Paulo, remain at a high R$1.68, up from R$1.29 in December (São Paulo is located in the country's southeast region where 85% of Brazil sugar and ethanol are produced).

Brazil's sugar mills operate exclusively with sugarcane and presently produce two kinds of ethanol: anhydride (water free), which is added to gasoline, and hydrated (with water), which is used in new fuel-flex cars and older ones that run only on ethanol. The mills also produce sugar.

The sugar-ethanol trade association (Unica) reports that this year over 87% of all the ethanol produced in Brazil will be used domestically and the remaining 12% will be exported. In the case of sugar, the situation is exactly the opposite: around 70% of sugar production will be exported and the rest used domestically.

Translation: Allen Bennett