The influence of oil prices on the value of ethanol at pumps will be stronger throughout 2022. It is fossil fuel that will set the pace of readjustments, which has already been seen this month.
After Petrobras announced an 18.8% increase in the price of gasoline and 24.9% in the value of diesel on March 10, ethanol also became more expensive for drivers at gas stations.
According to a survey by S&P Global Commodity Insights, the rise reached 5% in just one week after the adjustment made by the oil company.
Senior biofuels analyst at S&P, Beatriz Pupo, says that the direct impact of high oil prices can translate into more attractive ethanol prices for producers, by increasing the floor price for hydrated alcohol, which is sold at gas stations. The consultancy’s forecast is that the total production in the 2022/2023 harvest will be 29.3 billion liters.
“So far, domestic ethanol prices have been supported by strong international crude oil prices and a concomitant increase in domestic hydrous demand, as parity at the gas pump was below the 70% break-even point in the Southeast region. “, says the analyst.
This account is based on average fuel consumption. In general, a vehicle fueled with ethanol yields, on average, 30% less than if it was running on gasoline.
Therefore, to compensate in your pocket, the price of alcohol at the pump must be less than 70% of that charged per liter of gasoline.
In addition to oil, the climate is also one of the unknowns for mill owners in the current sugarcane cycle.
Although the forecast is for growth in relation to the previous season, there is concern due to weather conditions in the first third of the harvest. According to the consultancy Datagro, the scenario worsened due to the fires and frosts that occurred last year.
The 2022/2023 season, which starts in April, is expected to crush 562 million tons in the center-south of the country, according to the consultancy.
The amount is higher than the 525 million forecast for the 2021/2022 harvest, but it could be better if it weren’t for climate issues. With this volume, the mills will produce more ethanol and more sugar, according to the consultancy’s forecast.
29.8 billion liters of ethanol (including corn) are projected for the 2022/2023 crop, compared to the 27.7 billion expected for the crop between April 2021 and March 2022.
For sugar, the projection points to 33 million tons, compared to 32.1 million tons in the 2021/2022 harvest.
The harvest will continue with alcohol, with 55.3% of the sugarcane transformed into anhydrous ethanol (mixed with gasoline before sale) and hydrated (sold directly at gas stations), a rate slightly higher than the 55.1% of the production mix of 2021/2022 harvest.
For the Northeast region, Datagro projects a harvest of 53 million tons, up from the 52.5 million tons of the 2021/2022 harvest, with practically stabilized production of ethanol and sugar.
A professor at USP (University of São Paulo) specializing in agribusiness, Marcos Fava Neves says that the price outlook for the harvest is good for producers because the supply of sugarcane is balanced, while consumption is higher.
“We will probably have good prices, since sugar supply and demand are balanced and oil prices are high. [na safra] with low inventories and high consumption.”
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