Home / Oil & Energy / General Energy News / Brazilian mid-Nov ethanol inventories at 11.84 billion liters, up 4.2% on year: MAPA

Brazilian mid-Nov ethanol inventories at 11.84 billion liters, up 4.2% on year: MAPA

Brazilian total ethanol inventories as on Nov. 15 added 11.84 billion liters, an increase of 4.2% comparing to the year ago period, data released by the Ministry of Agriculture and Livestock, or MAPA, on Nov. 26 showed.

From the country’s total inventories, 11.48 billion liters or 96.96% are based in the Center-South region, which is also the largest ethanol producing and consuming region.

While CS ethanol inventories by mid-November were up 4.5% on the year, the higher volume has not been adding any additional selling pressure in the spot market, as the production period is expected to end earlier in 2020 than in the prior year, encouraging producers to carry larger stocks.

From total ethanol stocked in CS, the E100 hydrous ethanol accounts for 66.29% or 7.6 billion liters, up 4.9% on the year, but down 2.5% from the prior 15 days period. The higher year on year inventories is explained by the social isolation measures imposed due to the coronavirus outbreak, hampering hydrous ethanol sales from January to September 2020 in CS by 15.9% on the year.

In the meantime, anhydrous inventories has been faster consumed in Brazil, as it is composes 27% of the Brazilian gasoline C. During the same analyzed period its consumption decreased only 9.8% on the year.

Since mid-September, producers from CS region have been shifting a larger volume of the total ethanol production towards anhydrous in an effort to guarantee the domestic supply, despite the plunged imported volume in 2020.

CS anhydrous inventories recorded a year on year drop of 0.3% in mid-September. However, as a result of the higher anhydrous mix the scenario reversed since then, and on Nov. 15 anhydrous stocks in CS added 3.87 billion liters, up 3.6% on the year.

In the NNE region, where historically consumers favor the gasoline consumption, producers have been maximizing the anhydrous production since the beginning of the regional crop in September.

Anhydrous stocks in the NNE added 173 million liters on Nov. 15, up 16.6% on the year, while hydrous totaled 187 million liters a drop of 16.3%.

Even with the higher anhydrous production, S&P Global Platts Analytics estimates that additional 440 million liters will need to enter the NNE region to supply the expected gasoline demand.

What to watch

Brazilian highest ethanol inventory in 2020 reached on Oct. 15, when 12.14 billion liters were recorded by MAPA. The volume was 6.30% higher than the peak recorded in the prior year, when on Oct. 30 the country had 11.42 billion liters in stocks.

Despite the highest volume in stocks and reached 15 days in advance of the prior year, it is relevant to consider that Brazilian inventories are showing a stronger downward movement. From Oct. 16 to Nov. 15 the data shows that 296 million liters of ethanol were consumed from stocks, while in 2019 the stocks started to show a drop just in the first 15 days of November lowering by 59 million liters.

The key producing region of CS Brazil is expected to end the crop season 2020-21 earlier than in the prior year, making the high inventories a strategical decision to supply the country’s demand during the inter-crop period, from December to March.

In addition, the steep depreciation of the Brazilian real against the US dollar and uncertainties about the ethanol import quota as from Dec. 14, have been encouraging producers to carry larger volumes for the upcoming months, as there is a little risk of high volumes being imported from US.

The price effect of a lower volume imported from US has been mostly felt in the NNE region, which historically is the country’s main import entrance.

Platts assessed anhydrous ethanol DAP Suape on Nov. 19 at Real 3,015/cu m, a spike of 31% on the year.
Source: Platts

Recent Videos

Hellenic Shipping News Worldwide Online Daily Newspaper on Hellenic and International Shipping