26 March 2013 19:30 [Source: ICIS news]
MEDELLIN, Colombia (ICIS)--Brazil hydrous and anhydrous ethanol prices in the spot market in Sao Paulo State are lower this week as the new harvest season is beginning.
Sources said sellers were trying to unload remaining inventory to make room for product coming out of the new harvest.
The market is now loosening as the new harvest season attempts to get started, despite rain over the last week, which slowed the start-up.
Above-average and frequent rainfall in the second quarter is set to disrupt harvesting of this year's sugar cane crop in Brazil's centre south, the country's main growing region, according to Somar Meteorologia.
Wet weather will be constant, and rain may be about 30% above the historical average from April to June, according to the forecaster.
About 6% of the mills in the region have already started harvesting, and most of them are expected to begin the season next month, the forecaster said..
According to researchers at Cepea, the start-up of the harvest season will strengthen buyers’ negotiating power, especially for hydrous ethanol, and lower prices will surface.
Brazil blends anhydrous ethanol in gasoline at a mandated 20%, while hydrous ethanol is used as a standalone fuel in flexible-fuel vehicles (FFVs).
Brazil will increase its anhydrous ethanol blending rate in gasoline to 25% on 1 May, the government announced recently.
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