First quarter of the 2020/21 crop ends with fading prices in BR

Cepea, July 16, 2020 – The average prices for anhydrous and hydrous ethanol were dropping in São Paulo State by the end of the first quarter of the 2020/21 season (June/2020), compared to that in the same period of the 2019/20 crop.


Between April and June 2020 (considering the CEPEA/ESALQ monthly Indexes), the average price for hydrous ethanol decreased by 18.4% compared to that in the same period last year, in real terms (values were deflated by the IGP-M from June/20). As regards anhydrous ethanol, quotes dropped more sharply: by 19.7%, in the same comparison.


Pressure came from the steep decrease in the domestic demand for fuel, due to the social distancing advice to stop the covid-19 pandemic. Thus, not even the lower ethanol production in the major states in central-southern Brazil (since refineries were focused on sugar production) limited ethanol price drops in that period.


Confirming these figures, the volume of hydrous ethanol traded in the first quarter of the season decreased by a steep 47% compared to that in the same period last year. In June 2020, the volume was 5.1% lower than that in May 2020 and a steep 15.2% down compared to that in June last year.


BRAZILIAN MARKET IN JULY – The lower number of purchasers in the market and some refineries’ interest in sales pressed down ethanol prices in the first week of July. Thus, the volume of hydrous ethanol traded in the spot market was the lowest since the beginning of the 2020/21 season in SP.

New deals may have been hampered by the fact that the exchange ratio between hydrous ethanol and gasoline C at pumps in some states was near 70% in that period, as well as the volumes stocked in the major distributing bases in the state.


In the second week of the month, hydrous ethanol prices rose slightly in São Paulo State. However, in the fortnight, prices dropped. It is worth to mention that the CEPEA/ESALQ weekly Index has been oscillating since the beginning of the 2020/21 crop, signaling that a price trend is still undefined.


Between July 6 and 10, the CEPEA/ESALQ Index for hydrous ethanol closed at 1.6101 BRL per liter (zero ICMS and zero PIS/Cofins), 0.4% down compared to that in the week between June 22 and 26. For anhydrous ethanol, the CEPEA/ESALQ Index decreased by 8.2%, to 1.8271 BRL per liter (zero PIS/Cofins) between July 6 and 10.


As for the daily Index, the ESALQ/BM&FBovespa Index for the hydrous ethanol delivered to Paulínia (SP) closed at 1,673.50 BRL/cubic meter (zero taxes) on July 15, 0.24% up compared to that on June 30.




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