Center-South Brazil records historical high ethanol stocks for a crop beginning

Santos — Ethanol inventories in Brazil's Center-South, its largest producing and consuming region, were at 2.33 billion liters in first half of April, 98% higher on the year and at the highest volume ever recorded for that time period, Ministry of Agriculture and Livestock data showed Monday.

From the total ethanol inventories in the Center-South, hydrous, the E100 standalone biofuel, accounts for 1.34 billion liters or 121.8% more on the year, while anhydrous stocks were at 985 million liters a surge of 73.5% on the year.

Storage capacity is a not common issue for the crop beginning; however, for this cycle the scenario might start to change as producers with a better financial structure have been trying to hold stocks instead of accepting current low prices in the spot market. CS producers have started to crush the new 2020-21 crop, pressured by low domestic prices, lackluster liquidity and a record high ethanol stocks.

The Platts hydrous ethanol ex-mill Ribeirao Preto assessment was on average at Real 1,711/cu m in the first two weeks of April, down 22% from Real 2,213/cu m in the same period of 2019.

Over the first 15 days of cane crush in CS Brazil hydrous ethanol production reached 802 million liters, an increase of 20% on year, while the latest consumption data, for March, pointed at a decrease of more than 16% in the hydrous ethanol demand in the region, suggesting that stocks will remain under pressure.

HIGHEST CS ETHANOL END CROP STOCKS IN 5 YEARS

The Center-South saw ethanol stock levels on March 31 at 2.06 million liters, the highest since the same period of 2014, when it was at 2.60 million liters.

From the total end-stock crop 1.10 billion liters were hydrous ethanol and 963 million liters anhydrous, which was already pointing to an increase of 38% from a year earlier.

Ethanol production during the CS 2019-20 crop, from April 1, 2019, to March 31, 2020, reached the historical high volume at 33.24 billion liters, while ethanol sales by mills in the same period was at 33.26 billion liters, which could suggest a tight supply and demand picture, encouraging further imports in the crop cycle.

Imports into CS Brazil was at 756 million liters in the 2019-20 crop, a spike of 152% from 300 million liters in the prior crop, while just in the first quarter of 2020 more than 407 million liters reached the region, increasing the volume of ethanol stocked by distributors and lowering further the spot demand.

Industry association UNICA has been requesting support from the ministries of agriculture and mines and energy to guarantee that mills could survive during this consumption crisis. One of the requests is a credit line which could consider ethanol production as a guarantee.