REX American Resources (REX)

[value1008]

This story does not bode well for USA-produced ethanol if the emerging trend passes a critical threshold level... one of the factors driving it is the stronger and stronger US dollar.... If Brazil becomes a major exporter again, it obviously takes away marketshare for USA-produced ethanol and reduces Brazil's need to import US ethanol. Let's see how this plays out but it's one more reason for me to stay away from investing in ethanol players right now.

http://www.platts.com/latest-news/agriculture/montreal/brazilian-ethanol-export-offers-emerge-on-supply-21142677

Brazilian ethanol export offers emerge on supply glut, weaker currency

Montreal (Platts)--13Mar2015/510 pm EDT/2110 GMT

The combination of a weaker Brazilian real and an avalanche of supply just ahead of the start of the new crop in the country's Center-South is bringing back opportunities for ethanol exports.

FOB Santos anhydrous prices assessed by Platts have declined to $440/cu m on Friday -- the lowest since August 20009 following a plummeting real/dollar exchange rate which hit 3.2578 at the time of the assessments.

FOB Santos hydrous prices assessed by Platts also decreased to $400/cu m on Friday -- the lowest ever recorded since Platts started assessing prices on April 2014.

Offers for FOB Santos product for April loading were heard on Friday for hydrous ANP at $420/cu m, while anhydrous was heard at $450/cu m. No bids were heard against any of offers.

Traders see the current volatility of the exchange rate harming any potential deals and foresee bids will only start appearing once there is a more stable scenario.

"We are almost cheaper than the US to send product to Asia, but we need stability on the exchange rate before anything can st

The arbitrage window to send product to the US is not yet open, but last Friday a trade for 40,000 cu m was heard done at $475/cu m for April loading. Traders believe that once prices are at least 5 cents/gal below US market values, cargoes should start getting booked.

Besides the plunge in the exchange rate the recent pressure in the domestic ethanol values in CS Brazil is also playing a role in the increased availability for exports.

The pressure in the domestic market is attributed to a supply glut right at the end of the intercrop season.

The latest data from the Ministry of Agriculture shows overall ethanol (hydrous and anhydrous) stockpiles in the CS region by end-January are 34% higher compared to the same period last year at almost 7 billion liters. Estimates from Kingsman, the agricultural analysis unit of Platts, point that by the end of March anhydrous stocks will finish at 1.3 billion liters, compared with around 500 million liters last year.

Platts assessed hydrous ex-mill Ribeirao Preto at Real 1,400/cu m -- the lowest since late of November.

Usually, this time of the year prices are usually stronger since the region is at its intercrop period.

At this time last year, hydrous prices assessed at Real 1,610/cu m, which puts current prices 13% higher than where prices are now.

Anhydrous ex-mill Ribeirao also decreased to Real 1,360/cu m -- also the lowest since late November.

Again, a year ago prices were at Real 1,625/cu m, 16% stronger that current anhydrous ex-mill levels.

--Beatriz Pupo, [e-mail]
--Edited by Richard Rubin, [e-mail]