Hydrous ethanol prices in Brazil's key Center-South region declined over 13.72% in the week to Thursday.
S&P Global Platts assessed hydrous ethanol ex-mill Ribeirao Preto at Reais 2,200/cu m Thursday, down sharply from last week's record high of Reais 2,550/cu m. The sharp fall was due fundamentally to sunshine and drier weather allowed harvesting machines to enter fields and operate at full capacity in the region.
"Harvesting machines are being fully utilized in the Center-South to ensure as much ethanol is produced as possible to take advantage of the recent record high prices," one trader said.
Over the same period, anhydrous ethanol prices have fallen more than 16% week on week to Reais 2,075/cu m. Thursday's domestic anhydrous ethanol assessment was at a 7.47% premium over hydrous ethanol, net of the ICMS tax.
Another reason for the rapid fall in prices was due to a major ethanol trading firm offering large volumes of hydrous ethanol at Reais 2,300/cu m ex-mill Ribeirao Preto Tuesday, well below the record high of April 18.
"Sufficient ethanol supplies are expected to be delivered to gas stations across the Center-South in the near term and the weather forecasts remained favorable for harvesting," a second trader said.
Over the past two weeks the Brazilian real has declined around 4% against the dollar and NYMEX RBOB June futures have risen around 15%. If the real continues to weaken against the dollar and NYMEX RBOB futures continue to increase, the Petrobras average gasoline price for distributors will probably rise, thus putting upward pressure on hydrous ethanol prices.
Hydrous ethanol stocks at the end of March stood at 795 million liters, down 43% from mid-March, the largest stock draw for the period, according to the most recent data from the Ministry of Mines and Energy. The volume was 84% higher on the year and the highest for end-March since the 2014-15 Center-South crop.
"Despite the high volume of hydrous compared to a year ago, when converted into actual days of consumption, stocks were only equivalent to less than seven extra days of demand when compared to a year ago," said Beatriz Pupo, senior Biofuel analyst at S&P Global Platts Analytics.
