An increase in US spot ethanol prices this week has opened a “window of opportunity” for Brazilian producers to export the biofuel, traders said.

Midwest ethanol prices have risen 32 cents since as floods hit the region’s corn crop. This has boosted ethanol FOB prices in Brazil.
“Traders have reported an abrupt demand for anhydrous and prices rose strongly in recent days,” said Miguel Biegai, ethanol analyst at Safras e Mercado.
Anhydrous ethanol was traded at 490 reais to 520 reais per cubic meter (1,000 liters) FOB Santos, compared with 470-480 reais a week ago, in a sign that interest has picked up, traders said.
“This is a very sensitive market. Any problem that happens there (in the United States) can open this window for the Brazilian product. But this is also temporary,” said Marcelo Andrade, director at Ecoflex brokerage.
Brazil’s center-south is currently harvesting a record cane crop of about a half a billion tonnes. Ethanol output is the season’s priority as domestic consumption sets monthly records and exports are expected to rise from last crop, mainly to the United States.
Producers have been a little reluctant to sell as ethanol production was lower than expected as of May, mainly due to excessive rains in the first months of the harvest. But this has been changing as weather gets drier and mills start to regain lost ground.
“As mills normalise cane harvest, anhydrous production starts to increase,” Andrade said.
As a result of the rise in exports, ethanol prices on the domestic market stopped falling, traders said. Anhydrous was at around 820 reais a cubic meter without taxes on the local market.
Traders said a spike in demand for anhydrous ethanol usually indicates strong demand in the short term as this kind of ethanol is shipped directly to the US market paying a 54-cent-per-gallon tariff.
Exports via the Caribbean, which are exempt from the tariff, are always hydrous ethanol. The product is dehydrated in the region and then re-exported to the US.