Sao Paulo: In January, ethanol sales in the Brazilian market experienced a significant surge, as showed by industry data released on Thursday, reported Reuters.
Mills, faced with limited storage space due to a robust crop, were notably active on the selling side.
According to the data from industry group UNICA, total ethanol sales in the domestic market during the first half of January witnessed a substantial year-on-year increase of 44%, reaching 1.27 billion liters (335.5 million gallons). Notably, sales of hydrous ethanol, the variant that competes with gasoline at pumps for consumer preference, recorded an even more remarkable surge, rising by 83%.
Despite prevailing low prices, mills are engaging in large-volume sales. Hydrous ethanol prices in January hit a two-year low, as reported by Cepea Esalq, a research center at the University of Sao Paulo (USP). The surge in sales is attributed to the extensive stocks of ethanol resulting from a record sugarcane crop in Brazil during the 2023/24 season, prompting mills to liquidate their inventory even at lower prices.
Filipi Cardoso, a sugar and ethanol analyst at broker StoneX, explained that fuel distributors are actively procuring ethanol to build inventories ahead of an anticipated change in state taxes in February. This change is expected to elevate gasoline prices, potentially benefiting ethanol sales.
The report from UNICA disclosed that Brazil’s center-south sugarcane crushing reached 1.11 million metric tons in the first half of January, marking a substantial year-on-year increase of 152.3%, as the current season approaches its conclusion. Additionally, UNICA reported that sugar production during the period totaled 48,000 tons, representing a robust year-on-year surge of 148.6%, while total ethanol output increased by 62.4% to 338 million liters.
