The Unica’s most recent biweekly report on the cane harvest and production of derivatives for Brazil’s Center-South, with data collected up to the second half of December, brought the important update on the internal demand for hydrated ethanol. Although the market as a whole knows that production data tend to be very low, given the advanced stage of the off-season, which is at its height, the report is still present with high importance given the information on internal and external demand for the biofuel. Although, as indicated by SAFRAS & Mercado, domestic consumption of ethanol has its relative limitations, part of the still firm external demand forms a slightly more positive, or less negative, consumption scenario, depending on the analysis perspective.
Textually, besides simple descriptive tables, the report highlights the increase in the share of corn ethanol in the biofuel supply. Anhydrous ethanol accounts for 37% (versus 62% of cane) and 45% for hydrated ethanol (against 54% of cane). However, these high levels of supply representativeness for corn only occur because of the cane off-season. In the cumulative crop, corn accounts for only 5.10% of the anhydrous ethanol supply (with cane accounting for 94.90% of supply) and 6.40% of the hydrated ethanol supply (with cane still accounting for 93.60 % of supply). Another interesting point to note is that around 258 mills were out of operation until the end of December, with January expected to remain with only 10 mills operating (5 of corn, 3 of cane, and 2 flex).
SAFRAS & Mercado draws special attention to the absence of indications, in the textual part of the report, regarding ‘drought’ or ‘crop losses,’ as was possible to observe in the publications dated between July and October 2020. Since October, SAFRAS & Mercado has updated specific reports for its consulting clients warning about the prospects of above-average rain for the current off-season based on data from Inmet. Since then, a climate scenario with rain highly favorable to the development of cane fields has been confirmed, in line with the indications of SAFRAS & Mercado.