Santos — Brazilian ethanol exports to the US totaled 89 million liters in July, up 91% compared with June and more than double the 41 million liters in exports in July 2014, according to data from the Secretariat of Foreign Trade (SECEX) released Friday.
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The volumes sent to the US were the highest since January, when Brazil exported 102 million liters to the US.
Kingsman, the agriculture analysis unit of Platts, estimates that roughly 50% of the volume exported to the US in July was fuel ethanol. The arbitrage window that opened by mid-June increased interest in shipping Brazilian ethanol north in July and August.
Cumulative Brazilian exports to the US so far this year are down 22% year on year at 401 million liters. However, this deficit is expected to shrink quickly, with at least 133 million liters set to be shipped to the US in August, according to the latest shipping reports.
Such a total is almost quadruple exports to the US in August 2014 of 35 million liters. Of this total, at least 90 million liters is expected to be for fuel use, while the remainder will be for Ethyl tert-butyl ether reprocessing contracts.
Exports to the US in July represented 42% of Brazil's 213.5 million liters in July. A total of 91 million liters was exported in July 2014. July's total was the highest posted since October 2013. In the first seven months of 2015, Brazil exported 755 million liters of ethanol, down 14% year on year.
Kingsman estimates Brazilian ethanol exports in 2015 will total 1.5 billion liters, unchanged year on year. Of that total, about 850 million liters should be exported to the US, an increase of 17% compared with 2014, with 350 million liters of that for fuel usage and the balance for ETBE contracts.
Discussions for shipping FOB Santos anhydrous ethanol cargoes to the US gained some traction in late June as a weaker Brazilian real and US dollar exchange rate, stronger US ethanol prices and an increase in the D5/D6 RINs spread combined to make the arbitrage for Brazilian ethanol exports to the US more attractive.
In late June, FOB New York Harbor prices in late June increased to $1.70/gal ($449.09/cu m) from $1.60/gal at the beginning of the month, meanwhile, FOB Santos prices in late June fell to $480/cu m from $490/cu m at the start of the month.
The D5/D6 RINs spread went from around 16 cents/RIN in the end of May to almost 40 cents/RIN in mid June.