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Brazilian June ethanol exports highest in seven years: SECEX

Highlights

Ethanol exports in June at 298.8 million liters up 75% on year

Average export price in June at $410/cu m

Lacking spot demand suggest market trading term contracts

Santos — Brazil's total ethanol export in June was at 298.84 million liters, up 75% from June 2019 and the highest for any June since 2013 when the country exported 280 million liters, according to data released late July 6 by the Secretariat of International Trade, or SECEX.

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From total exports, 129 million liters or 43.2% shipped to the US and South Korea was the second highest importer, receiving 82 million liters.

Accumulated exports in the first six months of 2020 were at 843.6 million liters, up 20% on the year. Considering exports since April 1, when the CS crop period 2020-21 started total volume was at 526 million liters, up 56% from the same period of 2019.

In addition to a strategy to lower the domestic surplus, the strong depreciation of the Brazil real against the US dollar has encouraged exporters to look for potential buyers.

From the beginning of the CS crop cycle 2020-21, to June 30 the real averaged at 5.3711/$1 down from Real 3.9202/$1 in the same period of the prior year, increasing the revenue of Brazilian exporters in Real/cu m.

According to SECEX the total ethanol exported from Brazil in June added $122 million dollars in exports revenue. Considering the total volume exported in that month, the average price was at $410.64/cu m.

Although exports are surging on the year, it is still not enough to offset the domestic ethanol surplus triggered by the consumption crisis in the region.

Cumulative ethanol production from April 1 to June 16, reached 8.04 billion liters, down 3.69% year on year while sales to the domestic market reached 4.80 billion liters, a plunge of 27% on the year, according to the latest Industry Association, UNICA report.

Market participants reported that Brazilian ethanol prices were offering an economic advantage over other possible suppliers as US in April, when the international demand for hand sanitizer has spiked.

Even with a competitive price, the Brazilian ethanol export demand has been weak in the spot market, which does not reflect the high volume exported since the beginning of the CS crop season. The lacking demand in the spot market, suggests that a large parcel of the exports were traded under term contracts.