With higher demand and lower supply, prices rise in Brazil in September

Cepea, October 2, 2020 – Hydrous ethanol prices increased in the Brazilian market in September, despite having dropped for two consecutive weeks during the month. As for anhydrous ethanol, quotes rose too, registering a slight drop in the middle of the month.


The higher circulation of the population increased the demand for the biofuel in the Brazilian market, thus, the volume of hydrous ethanol marketed in mid-September was the highest in the 2020/21 season. Compared to the same period last year, the amount sold between Sept. 14 and 18 this year is 53.56% higher. As regards anhydrous ethanol, the volume marketed increased too, by 58.53% against the same week last season, according to Cepea surveys.


At the end of the month, prices were boosted by the one-off interruption of sugarcane crushing at some refineries in São Paulo State (SP), due to rains. Besides, gasoline price rises at refineries on September 22, by 4%, also underpinned ethanol quotes.


On the other hand, the devaluations earlier in the month were linked to an increase in supply. The refineries from central-southern Brazil (Mato Grosso, Minas Gerais, Paraná and Goiás States) needed to make room in storage tanks, increasing ethanol availability in the market. It is worth to mention that the weather has been favorable to both the harvesting and production in most Brazilian states. Also, quotes were pressed down by the devaluation of gasoline A at refineries.


Thus, between September 21 and 25, the CEPEA/ESALQ Index for hydrous ethanol averaged 1.8290 BRL per liter (zero ICMS and zero PIS/Cofins), 1.07% up compared to that in the week between August 24 and 28. As regards anhydrous ethanol, the CEPEA/ESALQ Index (zero PIS/Cofins) closed at 2.1107 BRL/liter, 3.44% up in the same comparison.


The ESALQ/BM&FBovespa Index for the hydrous ethanol delivered to Paulínia (SP) averaged 1,885.40 BRL/cubic meter (zero taxes) in the last week of September (21 – 25), 0.34% up compared to that in the last week of August (24 – 28).


According to data from Unica (Brazilian Sugarcane Industry Association), sugarcane crushing in the 2020/21 season has been faster this year than that last year. From April to September 16, 459.45 million tons of sugarcane were processed, 4.56% more than that in the same period last year.


Besides, ethanol production from corn is growing. In the 2020/21 season, the output is at 1.01 billion liters, a staggering 94.47% up compared to that in the same period last year. With the valuation of sugar in both the Brazilian and the international markets this season, many plants opted for producing sugar rather than ethanol, limiting ethanol supply.





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