• OPEC’s supply cuts have proven effective, with Brent prices now holding around $70/barrel;
  • This is positive for hydrous prices as gasoline ex-refinery values are readjusted to follow the international trend;
  • Furthermore, adverse weather and increase in distributors interest is expected to offer support for ethanol prices at the start of the season; 

Brent prices holding 

Brent Oil Prices (USD/barrel)

  • OPEC’s supply cuts, reduction from Iranian outflow and the crisis in Venezuela have reduced world’s oil supply;
  • The cartel has even come forward to say that the oil market is now in deficit;
  • The meeting schedule for this April was cancelled and should now take place in May or/and June, when OPEC will revise supply cuts;
  • The environment for oil prices seems more constructive and values are holding well into USD70/barrel;
  • Higher oil prices means higher gasoline levels which in turn is positive for hydrous ethanol prices in Brazil; 

Positive variables 

  • Adverse weather this week has hindered operations from the mills that have already started the season;
  • Around 2 days of operations have been lost this 1H of April;
  • This diminished supply at the start of the season, thus proving support for hydrous prices; 

CS Daily Rains (mm)

  • Contrary to the end of March, we have been seeing a renewed interest from distributors this week, looking to be more active in the market;
  • Demand has sustained close to record levels as parity at the pumps and gasoline prices over BRL4/litre (SP) have kept consumers preference turned towards the biofuel; 

Hydrous ex-mill Prices (BRL/litre)

  • The combination of high gasoline prices, adverse weather and steady demand is expected to offer support for hydrous prices at the start of the new 2019/20 season; 

Reflection in gasoline 

Brazil ex-refinery gasoline

  • Brazil gasoline price policy is to follow international prices;
  • With Brent recovery, gasoline values have been adjusted higher since February – close to levels seen in October last year;
  • The higher gasoline prices, the higher hydrous values can climb without losing competitiveness at the pumps;
  • This limits the downside for hydrous values;