Crude Oil price increase sustains ethanol prices in the Brazilian market

In the first six months of this year, crude oil futures showed a large increase at the New York Mercantile Exchange (Nymex). In the first week of June, crude oil futures averaged 72.67 dollar per barrel, a value 25 percent superior to the average of the same period in 2005. This scenario seems to be sustaining ethanol prices both in the domestic and international markets. In June, despite the on going cane harvest, the monthly Index CEPEA/ESALQ increased. Anhydrous ethanol averaged 0.98366 real per liter (excluding taxes) or 0.45 dollar in that month and hydrated price was 0.85455 real per liter (excluding taxes) or 0,39 dollar, up 1.8 percent and 0.71 percent, respectively, compared to May.

Mills sales have been mostly to accomplish export and domestic contracts, reducing the supply at Brazilian spot market.

The volume of hydrated ethanol traded in Sao Paulo state, increased 24.5 percent between 2000 and 2005, according to ANP (National Agency of Petroleum). The total volume traded in 2005 summed to 2,391,679 cubic meters, and in 2000, 1,921,437 cubic meters. In the first four months of this year, trades increased by 34.3 percent compared to the same period of the last year. The good performance of hydrated ethanol prices has been attributed to last years'increase of flex fuel vehicles sales, the higher prices of oil derivatives.

Regarding gasoline C, the volume traded in Sao Paulo state reduced 6.7 percent in the same period. Between January and April of this year, the traded volume of 2,283,675 cubic meters, was only 1.36 percent higher than last years' volume in this same period.


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