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Center-South Brazil sees record H2 April hydrous ethanol output at 1.3 bil liters: UNICA

New York (Platts)--10 May 2018 1108 am EDT/1508 GMT


Center-South Brazil produced 1.3 billion liters of hydrous ethanol in the second half of April, up 115.7% year on year, and up 52% from H1 April, data from industry association UNICA showed Thursday.


  • H2 April hydrous output up 116% on year at 1.3 bil liters
  • Sugar output up 34.83% on year at 1.53 mil mt
  • Sugar mix down 7.28 % at 35.78%
  • Sugarcane crush up 55.32% at 37.68 mil mt

"This is a record for the H2 April period and the highest since the H2 August of 2015, when the region was at the peak of the 2015-16 season. And Since 2010-11 there have been only three two-week periods that saw production rates of this magnitude," UNICA technical director Antonio Rodrigues said.

Anhydrous ethanol production was 429.88 million liters, up 28.78% from a year ago and up 214% from H1 April, when there was a reduction of output rates due to the obligation to carry stocks at the beginning of the crop.

The 2018-19 sugarcane season officially started on April 1 in the key Center-South region, the world's largest sugarcane and sugar producer.

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The increase in ethanol production reflects the lower proportion of the sugarcane being directed to sugar production, UNICA said.

The proportion of cane directed to sugar production in H2 April was 35.78%, below the expected 36.3% according to a Platts survey with individual forecasts ranging from 33-38.6%.

The sugar mix in H2 April is down from 43.06% a year ago but up from 31.5% in H1 April.

The amount of cane crushed was 37.68 million mt of sugarcane in H2 April, up 55.32% year on year, and up 70% from H1 April, UNICA data showed.

The volume crushed exceeded market expectations of 32.90 million mt, according to an S&P Global Platts survey released Wednesday.

Total recoverable sugar (ATR) was 118.85 kg/mt of cane, up 4.47% year on the year, and higher than 116.2 kg/mt expected by market participants.

Drier than usual weather for this time of the year is boosting sucrose content, but is starting to cause worries regarding the possibility of sudden death for the crop.

"This could turn bullish for sugar prices if it persists, as lower water reservoirs [also] would mean more cane could be needed for electricity generation," S&P Global Platts Analytics' senior analyst Claudiu Covrig said.

Despite the lower sugar mix, due to the higher crush and ATR levels the sugar production in H2 April reached 1.52 million mt, up 34.83% from a year ago and 115% from H1 April.

The cumulative sugarcane crush reached 59.8 million mt, up 42.67% on the year. Total sugar production stands at 2.237 million mt, up 21.63% on the year and total ethanol is up 67.7% at 2.72 billion liters.


HEATED DOMESTIC ETHANOL SALES


Cumulative ethanol sales in April totaled 1.9 billion liters, up 10% from 1.73 million liters sold in same period of 2017.

From that total, 1.86 million liters were diverted to meet the high demand in the domestic market and the balance was exported.

The highlight was hydrous ethanol sales, with 1.33 million liters sold in April, up 38.4% year on year. This is the eight consecutive month that hydrous sales surpassed the year-ago volume.

The improvement of the competitiveness of hydrous against gasoline at the pumps is attributed to the strong demand.

In the state of Sao Paulo the average parity stood at 72% at the beginning of April and fell to 66.3% in the first week of May, UNICA said. "Besides offering the cheaper fuel option for consumers at the moment, the presence of ethanol contributes decisively to the stability of gasoline prices in light of the recent increase of oil prices and the Real devaluation against the US dollar," Rodrigues said.

Hydrous ethanol is used as E100 fuel in flex-fuel vehicles and competes with gasoline at the pump. Anhydrous is blended with gasoline at a 27% ratio under a national mandate. Both products are also used in industry.

Hydrous prices plunged 17% in April, as new-crop supply started to reach the market but have started to recover this week.

S&P Global Platts assessed hydrous ex-mill Ribeirao Preto at Real 1,890/cu m (about $531/cu m)on Wednesday, the highest assessment since April 11.

--Beatriz Pupo, beatriz.pupo@spglobal.com
--Edited by Maurice Geller, maurice.geller@spglobnal.com



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