Price drops in March constrain valuations in the 2019/20 crop

Cepea, April 17, 2020 – The CEPEA/ESALQ Index for hydrous ethanol closed the 2019/2020 year-crop (April/19 to March/2020) at 1.8917 BRL per liter, on average, 6.1% up compared to that in the previous season (2018/19), in real terms – the monthly Indexes were deflated by the IGP-M from March/20202. As regards anhydrous ethanol, the CEPEA/ESALQ Index averaged 2.0745 BRL/liter (zero PIS/Cofins), 5.1% up, in the same comparison.


However, from the last day of the previous season to the last day of the 19/2020 crop, price rises were constrained by the sharp drops observed in March, when hydrous ethanol devalued a steep 14.8%, and anhydrous, 8.5%.


The total amount of hydrous ethanol traded in the 2019/20 crop was increasing until January 2020, according to Cepea surveys, surpassing by 7% that from the same period last crop. The good performance of hydrous ethanol sales at pumps was underpinning the prices paid to sugarcane growers until then. However, in the last two months of the season (February and March), the volume marketed decreased sharply, pressing down the total amount traded in the season by 3.7% compared to that in the previous year-crop, according to Cepea surveys.


In the retail market, the average exchange ratio between ethanol and gasoline C was lower than 70% during almost the entire season, averaging 66.3% - against 63.6% in the previous crop, according to data from ANP (National Agency of Petroleum, Natural Gas and Biofuels).


BRAZILIAN MARKET IN APRIL – Ethanol prices continued to drop in the first fortnight of April. With the quarantine decree and the government’s recommendation for no social contact, the demand for fuel at pumps was low in that period. Besides, some refineries increased the amounts supplied at lower prices.


Between April 6 and 9, the CEPEA/ESALQ Index for hydrous ethanol closed at 1.3990 BRL/liter (zero ICMS and zero PIS/Cofins) in São Paulo, 7.5% lower than that in the last full week of March (23 – 27). As regards anhydrous ethanol, the CEPEA/ESALQ Index closed at 1.5871 BRL/liter (zero PIS/Cofins), a steep 15.3% down, in the same comparison.




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