Financially strapped Brazilian sugar cane mills seeking to generate cash are selling ethanol as fast as they can produce it rather than building stocks, the head of Brazil’s main sugar milling association said.

Unica director Antonio de Padua Rodrigues said current prices of ethanol in Sao Paulo state, the largest producer and consumer of the biofuel, show how desperate some mills are to raise cash and try to finance operations.

“Some mills are selling at any price, at the speed of the production. They sell today to pay the bill coming due tomorrow,” said Rodrigues during a presentation in Sao Paulo.

According to Cepea/Esalq, a research centre at the University of Sao Paulo, ethanol selling prices in 2015 have been below the values seen last year, even with gasoline prices above the levels seen in 2014 and with ethanol demand around 40 per cent higher.

Last week, the average price for hydrous ethanol, the type used by the flex-fuel car fleet, stood at 1.17 reais ($0.33) per litre (before taxes, at the mill) in Sao Paulo, compared to 1.20 reais at the same period in 2014.

“Current prices are a fantasy, they are not real. They don’t reflect production costs and margins,” said Rodrigues, adding that more mills are likely to go bankrupt in Brazil in the coming months or years.

Around 70 mills in Brazil filed for bankruptcy protection in the last three years as a long period of subsidised local gasoline prices and weak international sugar prices squeezed profit margins.