Porto Alegre, March 4th, 2024 – The Unica’s data on the first half of February in the Center-South came in line with a typical off-season report, with residual production volumes in the short term and marginal adjustments in accumulated crop volumes. One of the few highlights of the report came due to the indication of 15 mills still in activity in the first half of February, (4 operating with cane, 8 with corn, and 3 flex units), as written in the textual part of the report. This explains the crush of 548 thousand tons of cane in the middle of the off-season, in the first half of February.
Despite this, SAFRAS & Mercado observed that in February 15 mills will resume, in advance, the new 2024/25 crop in the region, which should lead cane crushing volumes to margin gains to be published in the Unica’s next report, with consolidated data for the second half of February. Another short-term highlight comes from sales of anhydrous and hydrated ethanol. Unica pointed out that in the first half of February mills sold 473 and 805 mln liters of anhydrous and hydrated ethanol to distributors respectively.
Projecting these volumes from the first to the second half of February, we could have a final demand for the month of 946.4 mln liters of anhydrous ethanol and 1.61 bln liters of hydrated ethanol. The projection of sales from the first to the second fortnight leaves aside the subtraction of the two fewer days in the calendar that the month presents, as the extended Carnival holiday must have generated extra demand for both. Even so, in the second half of February, distributors also need to replenish their anhydrous and hydrated stocks used during this prolonged holiday.
In this sense, SAFRAS & Mercado’s second indication is that Unica’s next report must point to higher sales of both biofuels in the second half of February due to the replenishment of distributors’ intermediate stocks used over the long holiday. Still regarding ethanol, we have a clear increase in the percentage share of supply availability of corn ethanol, which, with the cane off-season, ends up helping to replace a large part of the short-term supply over the off-season.
While cane-anhydrous ethanol production was 151 mln liters, corn-anhydrous ethanol production was 166 mln liters in the first half of February. Corn-anhydrous ethanol accounted for 52% of the supply in the period, and cane-anhydrous ethanol 47% in the first half of February. The same can be said for cane hydrated ethanol, which had a supply of 233 mln liters, while corn hydrated ethanol had a supply of 189 mln liters, representing respectively 55% and 44% of the supply over the period. Even so, it is important to remember that the supply of cane-anhydrous ethanol prevails this season, representing 85%, and that of corn comes in second place, with 14% of the supply. Exactly the same proportions are observed for cane and corn hydrated ethanol.
SAFRAS & Mercado warns that the earlier-than-normal resumption of crushing by 15 mills in the second half of February does not interfere with the schedule of most other mills that only intend to start the crushing for the 2024/25 crop from May. These mills decided to leave cane on the field for longer to capture a greater sampling of rainfall over the next three months, mitigating part of the water deficit accumulated by below-average rainfall in the months of December, January, and February.
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