Ethanol demand to insulate sugar from crisis -ISO

By Marc Frank

HAVANA, Oct 15 (Reuters) - Rising use of ethanol and demand for sugar in Asia and the Middle East should help keep sugar demand growing despite the global economic crisis, the head of the International Sugar Organization (ISO) said on Wednesday.

"Sugar demand will grow independently of the crisis because the main centers now are in Asia and the Middle East which are not that effected," ISO Executive Director Peter Baron told Reuters.

"And ethanol is spreading like a brush fire all over the world. Everywhere you see that ethanol is gaining ground and sugar is the most efficient and environmentally friendly feedstock," he said.

Baron, in a speech on Wednesday to an international conference on derivatives focusing on animal feed and ethanol, said: "Ethanol from sugar cane yields eight times as much energy as it uses to be produced, compared to 1.5 times if the feedstock is corn and around 1.2 times in the case of wheat."

The ISO executive director said oil prices of $80 to $90 per barrel meant ethanol remained a viable alternative, but that if oil fell to less than $50 per barrel some higher-cost ethanol producers would be in trouble.

"I really don't think there will be a big impact in the world sugar economy except perhaps a slowdown in some mill and ethanol refining investments, some projects may be put on hold for a few years," Baron told Reuters.

"In Brazil, for example, many projects are slowing down and some have stopped as people wait to see how it all ends up. The funds with a lot of money are much more cautious now," he said.

(Editing by David Gregorio)