Brazilian ethanol stocks added 4.63 billion liters at the end of May, a surge of 82.2% or 2.09 billion liters on year, showed the latest data released by the Ministry of Agriculture and Livestock.
The volume was the record high for any end of May since S&P Global Platts started to track this data, back in 2010.
In 2019, a similar stock volume was reached just in end-June or 30 days later, when total ethanol stocks in Brazil were recorded at 4.19 billion liters.
From the total ethanol inventories 64.54%, or 2.98 billion liters, are hydrous ethanol, which is used in Brazil as a standalone biofuel E100, and the balance 1.64 billion liters anhydrous ethanol, used in a mandatory blend of 27% in the Brazilian gasoline.
In the key producing region of Center-South Brazil the total ethanol stocks were at 4.46 billion liters, exceeding in 77.4% the volume recorded in May 2019. Hydrous ethanol accounts for 64.77% of the total volume stocked at 2.88 billion liters, a spike of 93.3% on year. While the numbers were still pointing to a year on year surge, the percentage increase was already lower than the last three fortnights. In the end of April hydrous stocks were 119.3% higher on year.
The anhydrous ethanol stocks in CS Brazil were recorded at 1.57 billion liters by the end of May, up 54.1% on year and at the highest volume for the period. As the gasoline consumption in April eased by an average of 28.77% in Center-South, while hydrous demand lowered by nearly 32%, the anhydrous demand was less affected than the E100.
As a comparison, in end of May 2019, both hydrous and anhydrous stocks were recording a year on year drop at respectively 39.3% and 31.3%, a scenario that was built on a steady demand and lower production in the beginning of the crop, which was hampered by a wet weather condition in CS.
The plenty stock has been explained by a nearly stable ethanol production in CS Brasil which accumulated a total of 6.19 billion liters by June 1, a slightly decrease of 0.39% on year, and a plunged fuel consumption in Brazil, which has been capped by the coronavirus spread in the largest Latin America economy.
According to Pecege, a Brazilian consultancy company, Center-South Brazil has a storage capacity of nearly 11 billion liter of hydrous ethanol, while the maximum inventories already officially recorded was at 7.35 billion liters in end October 2019.
Stock pressure is a common reason for producers to lower their offers to attract demand, and in a year of a fuel consumption crisis it is hard to predict when that selling pressure will be triggered.
