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Brazil ethanol exports surge in June: SECEX

Brazil ethanol exports surge in June: SECEX

BRASILIA: Brazilian ethanol exports in June reached 160.1 million liters, almost double May volumes but down 38% from a year ago, data from the secretariat of foreign trade (SECEX) showed.

The FOB price declared by shippers to customs was on average $538.10/cu m, down 3% from May but up 23% from a year ago.

Platts assessed FOB Santos anhydrous ethanol in June at $509.86/cu m on average. This compares with an average price of $548.71/cu m in May and $537/cu m in June 2016.

In the first half of 2017, exports totaled 593 million liters, down 45% year on year. Most of the volume exported in June is expected to have been sent to the US.

SECEX is expected to release data on the export destinations in the next few days.

January through May exports to the US totaled 347 million liters, up 2% year on year.

The recent drop in ex-mill prices — as the Center-South 2017-18 harvest is at full speed — and the new real value against the US dollar have driven FOB prices down considerably.

The arbitrage for Brazilian product into the US West Coast has opened as FOB Santos anhydrous prices have become more competitive, according to market participants.

However, US traders see a lack of buying interest due to vessels already booked earlier in the year, limiting space for new shipments to be placed into the West Coast market.

Brazilian ethanol is currently attractive only in California because it awards sugarcane ethanol low carbon intensity value under its Low Carbon Fuel Standard mandate.

As for Brazilian exports to South Korea, volumes have declined dramatically to just 33 million liters, compared with 300 million liters exported over January-May 2016.

Cheaper prices from other origins have translated into poor buying interest for Brazilian product, sources said.

The S&P Global Platts assessment of FOB Santos Grade B ethanol averaged $460.29/cu m in June, compared to $493/cu m in May and $500.68/cu m in June 2016.

However, despite the recent price drop in Grade B, discussions for new shipments remain quiet, said sources.

The limited availability of shore tanks is restricting supply for prompt shipment, a trader said. Many shore tanks were occupied by imported gasoil in Brazil, the source added.