Porto Alegre, November 17, 2020 – The off-season of the sugarcane 2020/21 season in Brazil’s Center-South is increasingly in evidence with already residual volumes of the harvest and production amid mills. November rain must accelerate the recess of the end of the season, so intensifying the decline in the crush.
The Unica’s most recent biweekly report on the sugarcane harvest and production of derivatives of Brazil’s Center-South brought important information to the ethanol market. The indication of domestic sales of hydrated ethanol was 1.83 billion liters in October, which surprised the market and surpassed by 7.51% the expectation of SAFRAS & Mercado, which expected domestic sales around 1.73 billion liters. This volume, added to exports, places October as a period with sales of 2.03 billion liters only of hydrated ethanol. If we add the domestic sales of anhydrous ethanol, 792 million liters, and the exports of 191 million, we will have a total output of ethanol of 3.01 billion liters only in October. In the crop volume accumulated since April, the total output of ethanol between anhydrous and hydrated ethanol, for both the domestic and foreign markets, already hits 17.58 billion liters.
Even though the demand for hydrated ethanol in the physical market shows a 12.75% decline YoY, it grew by reached 7.90% in the margin. Compared to the average of the last 5 years for the same period, the growth is even greater, of 14.73%, while compared to the crop average we have a 19.59% increase. Thus, SAFRAS & Mercado warns that domestic demand is heating up exactly at the start of the off-season, with supply curves of cane, sugar, anhydrous and hydrated ethanol with strong negative slopes in the margin. Between the beginning and the end of October, the supply of hydrated ethanol decreased by 32%, anhydrous 16%, sugar 33%, and cane 27%.