Porto Alegre, March 17th, 2025 – February was a period of divergent behavior in hydrated ethanol prices, with a significant decline in the long term but sharp highs in the medium and short term. In February, average hydrated ethanol sales, based in Ribeirão Preto, fluctuated at BRL 3.39 per liter. This value was 2.65% higher than the average price of the immediately preceding month, January, when sales fluctuated around BRL 3.30 per liter.
However, compared to the same period last year, average prices in February showed a strong increase of 23.78% and a decline of 2.14% compared to the five-year average for the same period, which currently fluctuates at BRL 3.46 per liter. Both the annual and the five-year averages are corrected by inflation and brought to present values. Last month, SAFRAS & Mercado had estimated average prices for February for hydrated ethanol in the physical market in the range of BRL 3.33 per liter, which ended up being 1.70% lower than the actual average of BRL 3.39 per liter seen in February.
In addition, SAFRAS & Mercado expects average sales prices for hydrated ethanol in Ribeirão Preto at nearly BRL 3.38 per liter for March. If confirmed, this price indication should result in an 0.22% decline in the margin, compared to the immediately preceding month, February, as well as gains of 26% YoY, albeit 2.69% lower than the 5-year average for the same period. Both the annual and the 5-year averages are also adjusted by inflation and brought to present values.
SAFRAS & Mercado observes the sustainability of the current price line due to a solid short-term balance. On the one hand, we have the deepening of the off-season in March, with even greater consumption of hydrated ethanol stocks. The most recent data on stocks available for sale in the Center-South show that between the beginning and the end of January, 1.66 bln liters of hydrated ethanol were consumed, reducing the accumulated volumes from 5.21 to 3.55 bln liters.
Current stocks, therefore, show a 14% decline YoY and a 31% decline between the first and second half of January. On the other hand, the crop will be sharply brought forward in March by some sugarcane mills in the Center-South, besides continued growth in corn ethanol production. According to estimates by SAFRAS & Mercado, in February, 5 mills returned to crushing operations for the future 2025/26 crop during the first half of February, followed by another 15 mills in the second half of the month.
For March, SAFRAS & Mercado estimates that the Center-South will have another 38 mills starting to mill the new crop early in the region during the first half of the month and another 50 during the second half of the month. As a result, even before the new 2025/26 season officially begins according to the harvest calendar, at least 108 mills will already be in operation in the Center-South, out of a total of 260 mills that are expected to start operating in the new season.
SAFRAS & Mercado warns that in the first four fortnights after the start of crushing, mills will maintain an average cane crushing mix of between 70% and 100% focused on ethanol, which will maintain the scenario of product supply from the new crop with very high volumes in March, contrasting with the strong levels of stock consumption seen in February and that will remain so in March.
In addition, SAFRAS & Mercado warns that the February patterns observed regarding the competitiveness of hydrated ethanol against gasoline on average in SP indicate a price correlation of 67%, with a clear direction toward the level of 68%. This level of price ratio shows a much lower competitiveness pattern than that seen between July 2024 and January 2025, when the average competitiveness of hydrated ethanol against gasoline fluctuated around 65%.
As a result, besides a high supply of late-crop and corn ethanol stocks, with increasing supply, and the earlier start of the new cane crop, the physical market will also have a controlled level of demand that is lower than that seen in the second half of 2024, helping to stabilize the hydrated ethanol prices to be observed in March 2025.
