Sumário:
1. Week of October 12th: High Ethanol Sales in São Paulo State
1.1. Ethanol Deals in the Spot Market
1.2. High Collection of Previously Purchased Ethanol
2. Factors Influencing Ethanol Liquidity
2.1. Competitiveness of Ethanol against Gasoline
2.2. Ethanol Plants’ Firm Stance on Prices
2.3. Impact of Sugarcane Crops and Recent Rains
2.4. International Demerara Sugar Prices
3. Price Stability of Hydrous and Anhydrous Ethanol
3.1. CEPEA/ESALQ Index for Hydrous Ethanol
3.2. CEPEA/ESALQ Index for Anhydrous Ethanol
3.3. ESALQ/BM&FBovespa daily Index for Hydrous Ethanol
4. Increased Sugarcane Supply and Ethanol Production
4.1. Unica’s Report on Sugarcane Processing
4.2. Growth in Anhydrous and Hydrous Ethanol Production
4.3. Ethanol Production from Corn
5. Outlook for Corn Ethanol Production
5.1. Current Season’s Corn Ethanol Production
5.2. Optimistic Perspectives for the Coming Years
Introdução: A Week of High Ethanol Sales and Stability in São Paulo State
Cepea, October 17th, 2023 – The second week of October proved to be a fruitful one for ethanol sales in São Paulo State. Despite the national holiday on October 12th, which shortened the week, many ethanol deals were closed in the spot market. This article explores the factors behind this high liquidity in the market and the stability of ethanol prices. It also discusses the impact of sugarcane crops, recent rains, and international sugar prices on ethanol production and values. Additionally, the outlook for corn ethanol production is examined, highlighting the significant increase in production this season and the optimistic projections for the future.
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Cepea, October 17th, 2023 – Although the second week of October was shorter in Brazil – because of the national holiday on October 12th (Day of Our Lady of Aparecida) –, many ethanol deals were closed in the spot market of São Paulo State. Sales were high at the beginning of the week. Also, the collection of the product previously purchased at ethanol plants was high too.
Higher liquidity was linked to both the current high competitiveness of ethanol against gasoline at the pumps in São Paulo State and sellers’ (ethanol plants) firm stance on prices – agents were mostly focused on sugarcane crops, since recent rains have hampered the harvest and processing. Besides, the high price levels for demerara sugar in the international market have been underpinning ethanol values as this scenario encourages higher sugar production rather than ethanol production.
Still, the price for hydrous ethanol has been stable for at least a month. Between October 9-13, the CEPEA/ESALQ Index for hydrous ethanol closed at BRL 2.1753/liter (net of ICMS and PIS/Cofins), a slight 0.19% down from that in the last week of September (25-29). For anhydrous ethanol, the CEPEA/ESALQ Index closed at BRL 2.4366/liter, net of taxes (PIS/Cofins), 2% lower, in the same comparison. The ESALQ/BM&FBovespa daily Index for hydrous ethanol (Paulínia, SP) closed at BRL 2,301.50 per cubic meter on Oct. 13th, stable (+0.04%) compared to that on Sept. 29th.
According to Unica (Brazilian Sugarcane Industry Association), higher sugarcane supply in the current season has raised processing by 14.2%, so far (since April, when the season began), compared to that in the same period last season. The production of anhydrous and hydrous ethanol has increased 8.83%, also influenced by the production of ethanol from corn in central-western Brazil.
As for corn ethanol, nearly 3 billion liters have been produced in the current season, according to Unica, 44.2% more than that in the same period last year. For the coming years, perspectives are optimistic.
(Cepea-Brazil)
Cepea, October 17th, 2023
Ethanol Market in São Paulo State
The second week of October in Brazil was marked by a national holiday on October 12th, resulting in a shorter week. However, despite the shortened time frame, the spot market for ethanol in São Paulo State remained active, with numerous deals being closed. The beginning of the week saw a high volume of sales, and there was also a significant collection of previously purchased ethanol at the plants.
Factors Driving Higher Liquidity
The increased liquidity in the ethanol market can be attributed to two main factors. Firstly, ethanol has become highly competitive against gasoline at the pumps in São Paulo State. This has led to a higher demand for ethanol, resulting in increased sales. Secondly, ethanol plants have taken a firm stance on prices, further supporting the market. The focus on sugarcane crops has been a priority for agents due to recent rains impacting the harvest and processing. Additionally, the high price levels for demerara sugar in the international market have influenced the value of ethanol, as it encourages higher sugar production instead of ethanol production.
Stable Prices for Hydrous Ethanol
The price for hydrous ethanol has remained stable for the past month. The CEPEA/ESALQ Index for hydrous ethanol closed at BRL 2.1753/liter (net of ICMS and PIS/Cofins) between October 9-13, representing a slight 0.19% decrease compared to the last week of September. The CEPEA/ESALQ Index for anhydrous ethanol closed at BRL 2.4366/liter, net of taxes (PIS/Cofins), reflecting a 2% decrease in the same comparison. The ESALQ/BM&FBovespa daily Index for hydrous ethanol in Paulínia, SP, remained stable at BRL 2,301.50 per cubic meter on Oct. 13th, showing a minimal increase of 0.04% compared to Sept. 29th.
Increase in Sugarcane Supply and Ethanol Production
According to the Brazilian Sugarcane Industry Association (Unica), this season has seen a 14.2% increase in sugarcane supply and processing compared to the same period last year (since April when the season began). This has also influenced the production of anhydrous and hydrous ethanol, which has seen an 8.83% increase. The production of ethanol from corn in central-western Brazil has also contributed to this growth.
Optimistic Perspectives for Corn Ethanol
In the current season, nearly 3 billion liters of corn ethanol have been produced, representing a significant 44.2% increase compared to the same period last year. Looking ahead, the outlook for corn ethanol production remains optimistic.
Sources: Cepea-Brazil, Unica
Este texto não reflete, necessariamente, a opinião do Jornal Do Campo
Conclusion
In conclusion, the second week of October saw a high volume of ethanol deals being closed in the spot market of São Paulo State, despite the shorter week due to a national holiday. This increase in sales can be attributed to the high competitiveness of ethanol against gasoline and the firm stance on prices by ethanol plants. Furthermore, recent rains hampering the harvest and processing of sugarcane crops have also contributed to the higher demand and prices for ethanol. The stability of the price for hydrous ethanol in the past month is a positive sign for the market.
Questions and Answers
1. Why were many ethanol deals closed in the second week of October in São Paulo State?
The high competitiveness of ethanol against gasoline and the firm stance on prices by ethanol plants drove the increase in sales.
2. What factor has contributed to the high demand and prices for ethanol?
The recent rains hampering the harvest and processing of sugarcane crops have contributed to the higher demand and prices for ethanol.
3. How has the price for hydrous ethanol been in the past month?
The price for hydrous ethanol has been stable for at least a month.
4. How has the production of anhydrous and hydrous ethanol been influenced?
The production of both anhydrous and hydrous ethanol has been influenced by the higher sugarcane supply in the current season and the production of ethanol from corn in central-western Brazil.
5. What are the prospects for corn ethanol production in the coming years?
The prospects for corn ethanol production in the coming years are optimistic, with nearly 3 billion liters already produced in the current season, a 44.2% increase from the same period last year.
