Fuel Ethanol 22,82
3 22,16
2 19,29
18,59 21,45
6 24,08
5 28,79
6 26,20
1 25,98
1 27,10
Hydrous for Fuel 16,47
1 15,07
4 10,89
9 10,65
11,75 5
12,99 4
17,86 2
14,58 6
14,21 8
15,80 Anhydrous in Gasoline C
6,352 7,088
8,391 7,940
9,701 11,09
1 10,93
4 11,61
5 11,76
3 11,30
Gasoline C includes ethanol 25,40
9 29,84
4 35,49
1 39,69
8 41,42
6 44,36
4 41,13
7 43,01
9 43,56
5 41,85
Blend Rate Anhydrous Gasoline C 25.00
23.75 23.64
20.00 23.42
25.00 26.58
27.00 27.00
27.00 Blend Rate Overall
54.5 49.3
41.6 36.9
40.3 42.0
48.8 45.5
45.0 47.0
4.2. Production A. Production Estimates
ATOSao Paulo projections are based on industry sources. To be in accordance with the actual feedstock production cycle, the following narrative describes sugarcane and ethanol production in
marketing years.
ATOSao Paulo estimates Brazil’s marketing year MY April-March, unless otherwise stated
201718 sugarcane crush unchanged at 645 million metric tons mmt, down one percent relative to the revised figure for MY 201617 651.5 mmt. The center-south CS region is expected to
harvest 605 mmt of sugarcane, stable compared to the previous crop 607 mmt. Rainfall patterns have showed regular volumes for a large part of growing areas, however production in states such
as Goias and Minas Gerais were damaged by below average rainfall volumes. Specific growing regions in the state of São Paulo, like Bauru, were also adversely affected by below average rainfall
volumes. Aging of sugarcane fields is also affecting production. Very limited damage to sugarcane fields is expected from the frost that occurred in mid-July in the states of Mato Grosso
do Sul and Parana. The state of Mato Grosso do Sul was the most affected, but still with limited damage. The North-Northeastern NNE production for MY 201718 is projected at 40 mmt, down
10 percent relative to MY 201617 44.5 mmt due to drought affecting growing regions. See Gain Repot
BR17001 for further information about the sugarcane crop.
In June 2017, the Ministry of Science, Technology and Innovation MCTINational Technical Commission for Biosecurity CTNBio approved the commercial use of genetically modified GM
sugarcane, intended for sugar production rather than ethanol production. The new variety, CTC 20Bt, was developed by Centro de Tecnologia Canavieira CTC, uses the gene Bt Bacillus
thuringiensis, and is resistant to Diatraea saccharalis cane borer one of the major Brazilian sugarcane pests. The variety still needs to be multiplied and it will take a few years before full
commercialization. Total ethanol production for 2017 is estimated at 26.208 billion liters, down eight percent
compared to the revised figure for 2016 28.439 billion liters. Total ethanol production for fuel use is estimated at 24.088 billion liters, also down eight percent from the previous calendar year.
Sugar-ethanol mills are diverting less sugarcane to ethanol production in the current crop
– approximately 52 percent of the sugarcane volume as opposed to 53 percent in 201617, due to
favorable sugar prices in the international and domestic markets bolstered by the world deficit in sugar supply.
It is early to predict MY 201718 production. More accurate numbers should be available in the first quarter of 2018 with the development of feedstock from new sugarcane plantings and
recovery from current harvested areas. In other words, sugarcane from second, third, fourth, fifth and older cuts; as well as projections for sugar and ethanol demand in both the domestic and
international markets. The current production forecast is based on the assumption that regular weather conditions will prevail throughout the sugarcane production cycle in all producing regions,
an average pace of sugarcane field renewals, the forecast for sugar surplus in the world market during the 201718 cycle - thus reverting the strong deficit in the previous two cycles - and
increased demand for fuel ethanol. ATOSao Paulo projects 2018 total ethanol production at 28.708 billion liters, an increase of nine
percent vis-a-vis 2017. Ethanol for fuel production is forecast at 26.558 billion liters for 2018, up 10 percent from 2017. Total cellulosic ethanol production for 2017 is forecast at eight million liters
from sugarcane bagasse, which represents an insignificant fraction of total ethanol production in Brazil.
A.1. Corn Ethanol Production
Corn ethanol production is steadily growing, but its potential for future expansion remains limited by local fuel demand, profitability and logistic challenges. Demand is currently limited to corn
producing areas in the center-west, but it could potentially reach other north-northern states in Brazil.
Total ethanol production from corn for 2017 is projected at 480 million liters, or 1.8 percent of total projected ethanol production, and twice 2016 production 235 million liters. Post contacts
report that currently there are four plants producing ethanol from corn in Brazil, in the states of Mato Grosso and Goias. Two are flex-plants, producing ethanol from both sugarcane and corn, and
the remaining two are dedicated only to corn. Corn ethanol plants are feasible in corn producing areas, especially if close to livestock operations
because distiller’s dried grain solubles DDGs, a co-product from ethanol production, can be marketed as animal feed, thus increasing the profitability of the business. However, center-west
and northern corn producing areas are larger states with a lower population density and limited ethanol demand.
Moving the grain to other more populated producing states to produce ethanol where demand is higher also represents an issue because of the complex Brazilian tax system and lack of sufficient
infrastructure. Different states charge different value added tax also known as Goods and Services Circulation Tax ICMS
– “Imposto de Circulacao de Mercadorias e Servicos” for the same product, which, coupled with transportation challenges, makes transporting grain for ethanol production
financially unfeasible. B. Industrial Capacity
The total number of sugar-ethanol mills in 2017 is estimated at 384 units, according to updated information from ANP.
Hydrated ethanol production capacity for 2017 is estimated at 40.012 billion liters, slightly up from 2016 39.67 billion liters. This figure reflects the authorized hydrated ethanol production capacity
of 216,883 m3day, as reported by ANP, and an average of 185 crushing days. Anhydrous ethanol production capacity for 2017 is estimated at 21.65 billion liters based on
117,036 m3day authorized capacity by ANP and an average of 185 crushing days. Anhydrous production capacity increased roughly one percent compared to 2016.
Ethanol installed industrial capacity depends on annual decisions made by individual plants to produce sugar andor ethanol. Post contacts report that the industry responds to the theoretical
ratio of 40:60 to switch between sugar and ethanol production or vice versa from harvest to harvest. Once producing units adjust their plants to produce a set ratio of sugarethanol in a given
year, there is much less flexibility to change it during the crushing season. C. Sugarcane and Ethanol Cost of Production and Prices Received by Producers
According to industry sources, sugarcane represents between 60 to 70 percent of the cost of producing ethanol. Sugarcane prices received by third party suppliers for major producing states
are based on a formula that takes into account prices for sugar and ethanol in both the domestic and international markets. The State of Sao Paulo Sugarcane, Sugar and Ethanol Growers Council
CONSECANA was the first to develop this formula for the state of São Paulo, the major producing state, accounting for roughly 60 percent of the center-south production.
The cumulative CONSECANA price April-June 2017 for the state of Sao Paulo for the 201718 crop was R0.6233 per kg of TRS or approximately R78.21 per ton of sugarcane. Note that
CONSECANA’s prices are based on both sugar and ethanol prices in domestic and international markets.
The Ethanol Indexes released by the University of Sao Paulo’s College of Agriculture Luiz de Queiroz ESALQ follow. The indexes track anhydrous and hydrous ethanol for fuel prices
received by producers in the domestic spot market.
Price for Fuel Hydrated Ethanol - State of São Paulo R000 liters. Period
2013 2014
2015 2016
2017 January
1144.60 1284.80
1325.60 1824.40
1815.80
February 1232.00
1368.60 1384.70
1916.40 1686.10
March 1226.40
1419.50 1261.30
1906.60 1526.40
April 1244.30
1338.50 1261.60
1396.60 1471.80
May
1110.20 1200.90
1226.50 1391.00
June 1140.20
1214.90 1216.20
1501.90
July 1114.50
1229.10 1199.00
1501.50
August 1088.60
1207.00 1175.50
1559.70
September
1148.50 1200.60
1273.40 1665.90
October 1164.00
1138.30 1528.80
1857.90
November 1204.70
1218.20 1709.00
1869.30
December 1281.10
1265.50 1704.60
1867.90 Source: USPESALQCEPEA.
Price for Fuel Anhydrous Ethanol - State of São Paulo R000 liters. Period
2013 2014
2015 2016
2017 January
1302.50 1456.10
1458.20 1996.70
2047.10
February
1352.70 1520.50
1552.50 2083.00
1916.90
March
1374.50 1610.20
1420.40 2113.70
1697.60
April 1394.80
1522.00 1401.50
1602.40 1635.30
May 1329.10
1366.40 1363.10
1536.40
June 1285.20
1359.20 1352.40
1678.10
July
1271.20 1373.90
1328.80 1636.60
August 1227.30
1346.00 1300.70
1726.30
September 1277.10
1362.40 1358.30
1796.80
October 1315.40
1290.00 1658.30
2018.30
November 1342.80
1329.90 1870.40
2086.60
December 1440.00
1407.10 1888.10
2075.70 Source: USPESALQCEPEA.
Price for Hydrated Ethanol - Other Uses: State of São Paulo R000 liters. Month
2013 2014
2015 2016
2017 January
1,160.40 1,333.40
1,338.80 1,847.80
1,874.10
February 1,203.20
1,378.80 1,411.60
1,917.40 1,733.20
March 1,234.00
1,483.50 1,309.90
1,918.30 1,592.20
April
1,277.40 1,409.70
1,296.30 1,484.00
May 1,168.00
1,246.00 1,259.70
1,420.30
June 1,170.00
1,247.10 1,233.50
1,546.00
July 1,158.80
1,257.60 1,235.60
1,506.50
August
1,106.90 1,233.90
1,209.90 1,576.30
September 1,160.10
1,250.00 1,284.70
1,669.50
October 1,188.10
1,176.80 1,558.00
1,906.20
November 1,212.00
1,267.80 1,710.80
1,896.00
December
1,311.90 1,304.80
1,734.70 1,915.00
Source: USPESALQCEPEA.
Price for Anhydrous Ethanol - Other Uses: State of São Paulo R000 liters. Month
2013 2014
2015 2016
2017 January
1,371.20 1,477.60
1,482.60 2,072.20
2,110.10
February
1,368.10 1,523.40
1,508.00 2,084.50
1,930.80
March 1,363.70
1,596.50 1,417.60
2,125.70 1,761.00
April 1,401.30
1,535.80 1,415.10
1,729.50 1,676.40
May 1,376.20
1,387.20 1,406.70
1,633.50
June
1,320.40 1,372.70
1,403.30 1,746.20
July 1,335.10
1,390.70 1,402.80
1,668.70
August 1,284.50
1,354.50 1,377.80
1,745.50
September 1,289.20
1,381.30 1,434.10
1,820.50
October
1,340.90 1,356.90
1,695.60 2,036.80
November 1,387.70
1,377.40 1,854.30
2,171.30
December 1,477.80
1,445.90 2,003.50
2,019.50 Source: USPESALQCEPEA.
4.3. Consumption Total domestic demand for ethanol fuel and other uses for calendar year 2017 is forecast at
27.451 billion liters. Brazil is an important consumer of ethanol for fuel use. Total ethanol consumption for use as fuel is estimated at 25.981 billion liters for 2017, down 220 million liters
compared to the previous year due to the current recession in the economy and expected zero
growth of Brazilian GDP for 2017. Ethanol for ”other uses” demand is expected to remain
unchanged at 1.47 billion liters. Domestic demand for fuel ethanol in 2018 is forecast to increase to 27.1 billion liters, based on expected higher consumption of hydrous ethanol.
Consumer decisions to buy ethanol or gasoline are driven by the ratio between ethanol and gasoline prices. A 70 percent ratio between ethanol and gasoline prices is the rule of thumb in
determining whether flex car owners will choose to fill up with ethanol price ratio below 70 percent or gasoline price ratio above 70 percent.
The tables below show ethanol and gasoline prices and the price ratio for selected states, cities, and months. Note that in 2017, the ethanol-gasoline price ratio has not encouraged ethanol
consumption in the majority of states and cities sampled by ATOSao Paulo. The one exception is
the city and of Sao Paulo, where the bulk of Brazil’s ethanol production is concentrated.
Gasoline and Ethanol Prices in Selected States average price, Rliter Gasoline
Ethanol 2014
2015 2016
2017 2014
2015 2016
2017 Sao Paulo
State Jan
2.835 2.918
3.520 3.628
1.909 1.935
2.601 2.777
Feb 2.837
3.150 3.544
3.615 1.946
2.101 2.682
2.740
Jun 2.868
3.128 3.464
3.327 1.902
1.969 2.271
2.266
Aug 2.856
3.095 3.446
1.874 1.897
2.284
Sao Paulo City
Jan
2.803 2.878
3.486 3.588
1.903 1.914
2.588 2.757
Feb 2.800
3.100 3.507
3.584 1.935
2.069 2.658
2.748
Jun 2.835
3.074 3.414
3.237 1.869
1.935 2.245
2.220
Aug 2.674
3.042 3.394
1.841 1.862
2.237
Minas Gerais
Jan
2.976 3.025
3.707 3.850
2.134 2.198
2.781 2.947
Feb 2.963
3.304 3.741
3.827 2.149
2.363 2.907
2.944
Jun 2.952
3.366 3.683
3.618 2.210
2.232 2.522
2.577
Aug 2.969
3.340 3.684
2.173 2.152
2.548
Belo Horizonte
MG Capital
Jan
2.859 2.902
3.571 3.731
2.098 2.135
2.704 2.888
Feb 2.847
3.225 3.616
3.723 2.110
2.312 2.884
2.902
Jun 2.851
3.296 3.555
3.521 2.155
2.244 2.457
2.534
Aug 2.846
3.245 3.560
2.115 2.098
2.482
Rio Janeiro State
Jan
3.082 3.214
3.869 4.042
2.352 2.500
3.242 3.546
Feb 3.085
3.453 3.899
4.024 2.378
2.662 3.363
3.535
Jun 3.132
3.516 3.907
3.921 2.468
2.649 3.071
3.163
Aug 3.128
3.516 3.890
2.454 2.635
3.055
Rio Janeiro Capital
Jan
3.052 3.187
3.849 4.033
2.340 2.485
3.233 3.566
Feb 3.056
3.433 3.880
3.999 2.372
2.661 3.372
3.526
Jun 3.109
3.490 3.898
3.896 2.451
2.624 3.060
3.137
Aug 3.098
3.497 3.869
2.430 2.618
3.038
Porto Alegre RS
Capital Jan
2.897 2.967
3.963 3.813
2.387 2.389
3.501 3.697
Feb 2.882
3.297 3.959
3.797 2.396
2.586 3.586
3.714
Jun 2.884
3.289 3.810
3.731 2.384
2.491 3.352
3.439
Aug 2.872
3.316 3.886
2.337 2.487
3.352
Goiania GO
Capital Jan
3.136 3.220
3.650 3.902
2.225 2.181
2.629 3.023
Feb 3.111
3.431 3.384
3.742 2.175
2.339 2.837
2.810
Jun 3.085
3.170 3.782
3.771 2.100
1.974 2.659
2.689
Aug 3.134
3.224 3.795
2.166 2.043
2.693
Fortaleza Jan
2.891 3.151
3.876 3.980
2.335 2.572
3.073 3.288
CE Capital
Feb 2.879
3.347 3.867
3.974 2.342
2.601 3.091
3.276
Jun 2.952
3.370 3.968
3.845 2.471
2.609 3.274
3.255
Aug 2.984
3.369 3.941
2.491 2.608
3.244 Source: Petroleum, Natural Gas and Biofuels National Agency ANP.
Ratio EthanolGasoline Prices 2014
2015 2016
2017 Sao Paulo State
Jan 67
66 74
77
Feb
69 67
76 76
Jun 66
63 66
68
Aug 66
61 66
Sao Paulo City Jan
68 67
74 77
Feb
69 67
76 77
Jun 66
63 66
69
Aug 69
61 66
Minas Gerais Jan
72 73
75 77
Feb
73 72
78 77
Jun 75
66 68
71
Aug 73
64 69
Belo Horizonte MG Capital Jan
73 74
76 77
Feb
74 72
80 78
Jun 76
68 69
72
Aug 74
65 70
Rio Janeiro State Jan
76 78
84 88
Feb
77 77
86 88
Jun 79
75 79
81
Aug 78
75 79
Rio Janeiro Capital Jan
77 78
84 88
Feb
78 78
87 88
Jun 79
75 79
81
Aug 78
75 79
Porto Alegre RS Capital Jan
82 81
88 97
Feb
83 78
91 98
Jun 83
76 88
92
Aug 81
75 86
Goiania GO Capital Jan
71 68
72 77
Feb
70 68
84 75
Jun 68
62 70
71
Aug 69
63 71
Fortaleza CE Capital Jan
81 82
79 83
Feb
81 78
80 82
Jun 84
77 83
85
Aug 83
77 82
Source: Petroleum, Natural Gas and Biofuels National Agency ANP. Gray Area means gasoline prices more attractive than ethanol
The size of the Brazilian light vehicle fleet also plays a role in encouraging ethanol consumption. The fleet is estimated at 35.46 million units in June 2017, and pure hydrous ethanol and flex fuel
powered vehicles together represent approximately 76 percent 27 million units of the total fleet. The table below shows the licensing of flex fuel vehicles FFV and hydrous ethanol powered cars,
as reported by the Brazilian Association of Vehicle Manufacturers ANFAVEA. Sales of FFV currently represent over 90 percent of total monthly vehicle sales. The slowdown of the Brazilian
economy in 2016 has sharply affected the purchasing of new flex-fuel cars.
Licensing of Ethanol Powered Vehicles pure ethanol flex fuel units 2011
2012 2013
2014 2015
2016 20171
2,848,071 3,162,824
3,169,111 2,940,508
2,194,020 1,750,754
881,559 Source: National Association of Vehicle Manufacturers ANFAVEA 1 January-June
4.4. Trade A. Exports
