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The sugar market in Brazil is closely related to the ethanol market. Although the Brazilian government has abolished all sugar market intervention measures, it still retains control over the ethanol-gasoline blend ratio. In this study, we investigate the implications of a change in this blend ratio on the world ethanol and sugar marketsparticularly in terms of production, consumption, exports and importsby applying a newly developed World Ethanol-Sugar Market Model. Our simulation suggests moderate impacts on world ethanol and sugar markets.

Impacts of the Brazilian Ethanol Program on the World Ethanol and Sugar Market: An Econometric Simulation Approach