In July, the price ratio between crystal sugar with up to Icumsa 150 and the average between the prices of anhydrous and hydrated ethanol, both charged in the Brazilian domestic market and based on Ribeirão Preto, remained within the new pattern of advantage over the biofuel in a scenario that has been observed since February this year when, until then, the pattern of the hydrated ethanol advantage seen since July 2019 was reversed.
The average advantage of crystal sugar with up to Icumsa 150 in July, of around 24.53%, was very close to that seen in the immediately previous month, June, when it hit 24.51%. This maintenance of a pattern of gains of sugar over hydrated ethanol, which has already lasted six months, occurred due to a very clear balance of margin developments in the prices of derivatives. On the one hand, hydrated ethanol rose 2.81% between June and July in liters in Ribeirão Preto. However, anhydrous ethanol in the same period ended up retreating 0.98%, neutralizing almost half of the positive influence of hydrated ethanol on the composition of the average.
Besides, sugar ended up advancing 0.86% from June to July, reinforcing the commodity’s advantage over the biofuel. Had it not been for a more selling attitude by ethanol mills at the end of the month due to the need for cash in the short term, ethanol could have had a real chance of maintaining the average disadvantage at 15% instead of the effective average of 24%. The expectation of SAFRAS & Mercado is that with the expected advances over hydrated ethanol in August, due to the resumption of vehicle circulation and lack of sufficient purchasing power for crystal sugar to react more strongly, the advantage of the commodity may be reduced this month to levels around 13% in its final averages.