Higher demand in May boosts prices in the Brazilian market

Cepea, June 1st, 2021 – After having decreased in April, the first official month of the 2021/22 season, prices for hydrous and anhydrous ethanol rose sharply in the Brazilian market in May. Data from Cepea show that, for hydrous ethanol, the CEPEA/ESALQ monthly Index in May was the highest since February 2020, when it closed at 2.9711 BRL/liter, in real terms (values were deflated by the IGP-M from May/21). As regards anhydrous ethanol, the CEPEA/ESALQ monthly Index is the highest since March 2018, when it closed at 3.3268 BRL/liter.


The boost came from the increase in the demand for the biofuel in some weeks of the month, when distributors replenished inventories, despite the loss of competitiveness against gasoline C at the pumps in SP. In May, the volume of hydrous ethanol sold by ethanol plants in SP increased by 33.6% compared to that from April and by 14.8% compared to that in May 2020.


Considering the full weeks of May, the CEPEA/ESALQ Index for hydrous ethanol averaged 2.9410 BRL/liter, a staggering 14.3% up from that in the full weeks of April. As regards anhydrous ethanol, considering only the spot market, the CEPEA/ESALQ Index averaged 3.4055 BRL/liter in the full weeks of May, 17.8% up, in the same comparison.


In that scenario, prices for both types of ethanol have been firm in the 2021/22 season, as well as that for crystal sugar in the Brazilian market. In the first fortnight of May, as sugarcane crushing was lower in central-southern Brazil (by almost 3% compared to that in the same period last year and by 16.2% in the current year-crop), the productions of sugar and ethanol have been lower than that last season, according to data from Unica (Brazilian Sugarcane Industry Association), by 4.4% for sugar and 8.3% for hydrous ethanol.


On the other hand, ethanol consumption was higher in the first fortnight of May than in the same period of 2020, by 5.47% for hydrous ethanol (780 million liters) and 30.3% for anhydrous ethanol (382.5 million liters), according to Unica.





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