PIRACICABA, Brazil, May 30 (Reuters) - Brazilian mills are expected to cut cane allocation for sugar production in the 2019/20 crop, diverting more cane to ethanol output, amid low sugar prices and strong local demand for the biofuel, Canaplan consultancy said on Thursday.

 

Canaplan's chief analyst Caio Carvalho said during a presentation at a sugar conference in Piracicaba that he had revised lower his April view of a 38% cane allocation to sugar to a range of between 34% and 34.5%, which will result in smaller sugar production than initially expected.

 

"Back in April, we expected mills would produce more sugar in the new season, but considering what we have seen in the fields so far, we changed our view for the production mix," Carvalho said.

 

The consultancy increased its view for ethanol production from 28 billion liters to 29.8 billion liters. The biofuel continues to have a large price advantage compared to gasoline in the largest consuming regions in Brazil.