Crop is ending in Brazil; demand for ethanol continues high

Cepea, November 19, 2019 – The fast trading pace for hydrous ethanol underpinned quotes for the biofuel in São Paulo and other states from central-southern Brazil in the first fortnight of November. A large volume was allocated to consumption within these states, due to the advantage of ethanol prices over gasoline at pumps. Besides the demand, agents from refineries have been increasing asking prices almost every week, also influenced by the end of sugarcane crushing at many plants.


Data from Cepea show that hydrous ethanol prices have been on the rise since early 2019/20 in the main producing states, except in Mato Grosso. In São Paulo, from April to October 2019, quotes increased 1.94% – compared to that in the same period last year –, in real terms (values were deflated by the IGP-M from October 2019).


In Goiás (deals within the state), prices rose by a slight 0.55%, in the same comparison; in Mato Grosso do Sul (deals for delivery in São Paulo and southern Brazil), by 1.98%; in Minas Gerais, by 1.14%; in Paraná, by 1.62% (in these two last states, price averages reflect both local deals and for delivery to other states).


In Mato Grosso (considering deals to meet the demand within the state), the average price this season is much lower than that in the previous crop, by 9.6%. In this case, price drops are also linked to the supply increase in the state – large plants are focused on ethanol production from corn.


According to data from Unica (Brazilian Sugarcane Industry Association), the production of hydrous and anhydrous ethanol from corn in central-southern Brazil between April 1 and November 1 increased 136% compared to that in the same period last year, from 313.3 million liters to 739 million liters.


Between November 11 and 14, the CEPEA/ESALQ Index for hydrous ethanol closed at 1.8784 BRL per liter (zero ICMS and PIS/Cofins), 1.1% up compared to that in the week between October 28 and November 1. Concerning anhydrous ethanol, the CEPEA/ESALQ Index closed at 2.0855 BRL per liter (zero PIS/Cofins), 2.2% up in the same comparison. The ESALQ/BM&FBovespa Index for hydrous ethanol delivered in Paulínia (SP) averaged 1,960.50 BRL per cubic meter (zero taxes) on Nov. 14, 0.4% up compared to that on Oct. 31.


With the national holiday on November 15 (Republic Proclamation Day), distributors continued to demand ethanol to meet the firm demand. Thus, the amount of hydrous ethanol marketed almost doubled from one week to the other, raking in second place in the 2019/20 crop.




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