Montreal — The implementation date for Brazil's much-awaited increase of the anhydrous ethanol blend into gasoline to 27% will be March 16, the country's minister of mines and energy said late Wednesday after a government meeting.
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The announcement came a month after a government meeting with the sugarcane and automotive sectors defined the new percentage at 27%, up from the current 25%, instead of the initially discussed rate of 27.5%.
Brazil's Senate approved a measure in early September to raise the amount of ethanol blended into gasoline at the pump.
The measure was signed into law by President Dilma Rousseff allowing up to 27.5% of anhydrous ethanol.
With a 27% anhydrous mixture into gasoline, demand in Center-South Brazil -- the largest consuming and producing region of the country -- should grow by 60 million liters/month, according to Kingsman, the agricultural analysis unit of Platts.
The industry is confident it has enough capacity to handle the potential demand increase, despite lingering concerns with weather issues in CS Brazil that may impact cane availability next season, which starts April 1.
Anhydrous ethanol ex-mill prices in CS Brazil are not expected to immediately react to the news given the current glut in ethanol stocks to be used in the intercrop season.
Recently, both hydrous and anhydrous ex-mill Ribeirao Preto prices assessed by Platts have fallen sharply to the lowest levels since January 15 due to the massive supply availability.
Kingsman calculations point to much higher stockpiles by the end of the intercrop season -- which usually runs from January until the end of March -- of almost 1.3 billion liters of anhydrous ethanol, compared with about 400 million liters at the same time last year.