Brazilian ethanol imports recovered in December with 84.6 million liters entering the country, 

up 68% from November, Secretariat of Foreign Trade (SECEX) data showed Friday. 

Most  of  the  volume  (59.5 million liters)  entered  Brazil through the port of Sao Luis in the 

Northeast. The vast majority of ethanol imports into Brazil originated in the US and are to be 

blended into gasoline. 

Total imports of ethanol in Brazil in 2017 reached a record 1.82 billion liters, more than doubl

e  the  834.6 million liters imported a year ago and making Brazil a net importer of ethanol for 

the first time. 

The increase in December imports was anticipated, given the plunge in US ethanol prices to 

their  lowest  since  2005  and  higher Brazilian domestic prices in Brazil as the Center-South 

entered its intercrop season. 

This allowed the arbitrage window to open despite Brazil's recently imposed tariff of 20% on 

quarterly volumes greater than 150 million liters. 

Additionally, since the tariff was implemented in September 4, 2017, as of December a new 

quarter period started. 

"The  price advantage  of  imported  ethanol  into  the  Northeast  is  of  Real 90/cu m when 

compared to offers of the domestic product," a broker told S&P Global Platts Friday. 

According  to  S&P  Global  Platts ethanol price assessments delivered in Suape, the import 

arbitrage appears open -- even with the 20% tariff -- since early December. S&P Global Platt

s started publishing weekly prices for ethanol in Northeast Brazil as of November 10, 2017. 

According to recent lineup reports, seven vessels are due to discharge ethanol in Brazilian 

ports in early January. 

Brazil  is  expected  to  remain  a  net importer of ethanol in 2018, given stagnant production 

rates due to a lower sugarcane crop forecast for the next season. 

A  smaller  sugarcane  crop  is  estimated by Kingsman, the agricultural analysis unit of S&P 

Global Platts, at 580 million mt for 2018-19, down from 594 million mt in 2017-18, due to the 

aging of the cane fields and lower productivity. 

With 55% of the crush expected to be directed to ethanol this should translate to a total of 

25.2 billion liters of ethanol, down 0.9 %. 

Total imports in 2018 should reach around 1.5 billion liters, show Kingsman estimates, down 

20% from 2017 but still the second-highest volume of ethanol to be imported in the country.