Prices drop early in the month, but end the fortnight on the rise in Brazil

Cepea, November 17, 2020 – Prices for hydrous ethanol, which increased in the Brazilian market for six consecutive weeks, resumed dropping in the spot market of São Paulo State in early November. For anhydrous ethanol, quotes dropped after having increased for seven weeks.

 

Prices were influenced by a scenario of uncertainties, such as the political and economic scenario in the United States, the second wave of covid-19 in Europe, and the wider oscillations of oil prices in the international market.

 

Besides, large-sized purchasers were away from the spot market, due to previous acquisitions. Distributors (small and mid-sized) purchased ethanol to replenish inventories, which is typical after holidays (November 2nd, Day of the Dead). In this scenario, the volume of hydrous ethanol sold in the first week of November decreased by a steep 66% compared to that in the previous week.

 

However, in the second week of the month, prices resumed rising, boosted by higher demand. Purchasers returned to the market aiming to replenish inventories for December sales, which are generally high. Besides, the 6% increase in gasoline prices at refineries, from Nov. 12, made sellers unwilling to lower asking prices for ethanol. It is also worth to mention that a high number of ethanol plants from central-southern Brazil has already ended crushing sugarcane, beginning the offseason.

 

Thus, from November 9 to 13, the CEPEA/ESALQ Index for hydrous ethanol (paid to ethanol plants) closed at 2.0620 BRL/liter (zero ICMS and zero PIS/Cofins), a slight 0.24% up compared to that in the week between October 26 and 30. For anhydrous ethanol, the CEPEA/ESALQ Index closed at 2.4403 BRL/liter (zero PIS/Cofins), 0,57% up in the same comparison.

 

The ESALQ/BM&FBovespa Index for the hydrous ethanol delivered to Paulínia (SP) closed at 2,125.50 BRL/cubic meter (zero taxes), a slight 0.19% down in the fortnight.

 

The demand for anhydrous ethanol continues firm in the Brazilian market. According to data from Unica (up to Nov.1st), ethanol plants are prioritizing the production of anhydrous ethanol. The firm demand for the fuel used in the mix with gasoline encouraged the transformation of 96 million liters of hydrous ethanol into anhydrous. Still according to Unica, fuel consumption increased in the past two months. However, compared to that last season, current consumption is lower.

 

EXPORTS – According to data from Secex, Brazil exported 428.71 million liters of ethanol (anhydrous and hydrous) in October, the highest monthly volume since August/13, with a revenue of 183.89 million USD (1.03 billion BRL). This volume is 46.12% higher than that from September/20, and the revenue, 50.17% higher. In the 2020/21 season (April to October 2020), Brazil has exported 1.9 billion liters of the biofuel, 49.92% up compared to that in the same period last season (1.29 billion liters).

 

(Cepea-Brazil)

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