Brazil's 2019-20 center-south cane crush is expected to rise to 590 million tonnes, cane industry group Unica said on Tuesday, 2.9% higher than the previous season.
Unica said the larger crush is due to favourable weather conditions over most of the year, which led to an average agricultural yield gain of 4.2% to 76 tonnes per hectare.
Sugar production is seen growing less, 0.72%, to 26.7 million tonnes, as mills are expected to allocate only 34.29% of the cane to produce sugar, an all-time low amount, using all the rest to make ethanol.
Production of the biofuel is seen rising 7.1% to 33.1 billion liters in 2019-20, as demand and prices continue strong in Brazil where the fuel has a large price advantage over gasoline.
Ethanol prices in Sao Paulo, Brazil's largest fuel market, reached 2 reais per liter ($1.86 per gallon) last week (price before taxes, paid at mill gate), the highest nominal value ever, according to research body Cepea/Esalq.
Evandro Gussi, Unica's chief executive, said the price spike is a consequence of high demand and the proximity of the between-crops period.
"We will not have lack of ethanol in the market, but stocks will be tight," he said.
Brazil's center-south usually finishes cane crushing early in December, and resumes processing around March. During that time, mills sell ethanol they have been stocking.