The sugar market in the Northeast region of Brazil has evolved from a scenario created by the large volume of imported ethanol that has arrived at local ports for the last four to five weeks. Of course, many of these shipments are from previous contracts, especially when the dollar was closer to BRL 5.00, between the end of the previous year and the beginning of this year. Moreover, these volumes arise from the last deals closed before the import quota was completed. Currently, there is no longer arbitration for ethanol imports because of the currency devaluation in Brazil and the fulfillment of the import quota.
In this context, there is also a high expectation toward the demand repressed by the remainder of this volume that presents far more competitive prices compared to local origination. This demand exists even for residual volumes from smaller distributors. Moreover, the demand still repressed at the pumps, in the expectation of more severe social distancing measures, also allows a greater market opening for these smaller distributors. In this context, the anhydrous ethanol indications started the month of January at the level of BRL 2.95 in Paraíba, BRL 2.90 per liter in Pernambuco, and BRL 2.88 in Alagoas. However, these levels slightly declined in the second week of January, as seen in Alagoas (to BRL 2.85) and Pernambuco (to BRL 2.88).
At the beginning of the third week of January, prices hit BRL 2.80 to 2.85 in Pernambuco at mills, and BRL 2.90 CIF Suape. In Paraíba, the week started with offers at BRL 2.95 a liter, with clear support from the low supply amid local mills, with only two of them having product available for sale. For hydrated ethanol, inside mills in Paraíba, last week ended with prices around BRL 2.30 a liter. However, with the 7.93% increase in gasoline prices set by Petrobras, sell prices were raised to BRL 2.35 in the same state. In Pernambuco, prices went up from BRL 2.25 to 2.30 last week also due to the high in gasoline prices. In Alagoas, prices remained at BRL 2.20 for sales inside of the state.