Sweetener-Ethanol Complex in Brazil, the United States, and Mexico: Do Corn and Sugar Prices Matter?

Abstract

Sugar is a major commodity, produced and traded around the world, but it is no longer the only sweetener. For example, in the United States, roughly 50 percent of the sweetener market is made up of high fructose corn syrup (HFCS), which is also making inroads into Mexico. This is not the case, however, for the European Union and countries such as Brazil, which dominates the world sugar market in almost all aspects (Schmitz, 2002). In the United States, 8 to 10 percent of the U.S. corn crop goes into HFCS production, with roughly the same percentage of corn being used for the production of ethanol (Schmitz and Polopolous, 1999). In Brazil, however, sugarcane, rather than corn, is used in the production of ethanol. Because of relative price differences for corn and sugar, along with government subsidies, countries like Brazil will remain heavily dependent on sugar for both its sweetener needs and ethanol production.International Relations/Trade, Resource /Energy Economics and Policy,