Generic Hero BannerGeneric Hero Banner
Latest market news

Brazil to face weaker La Nina conditions

  • : Agriculture, Biofuels, Biomass, Electricity
  • 25/01/16

Many government agencies expect a weaker La Nina weather pattern in Brazil — partially because of its delayed start — that could help reverse damages from a previous droughtand boost hydroelectric power generation.

La Nina conditions emerged a month later than expected, starting only in January, according to national meteorology institute Inmet. Its presence was confirmed by the US' National Oceanic and Atmospheric Administration (NOAA) and is 40pc likely to last until March-May.

Delayed La Nina conditions and its weaker effects on Brazil's climate may be linked to the global average temperature hitting an all-time high in 2024, according to the World Meteorological Organization. La Nina conditions develop when the surface waters in the tropical Pacific Ocean are cooler-than-average across the central and central-eastern regions. But global oceans have been running much warmer for more than a year, which could have delayed the phenomena, according to NOAA.

Its usually causes heavier rains in Brazil's northern and northeastern regions, while central-southern states experience drier weather and heatwaves.

Brazil, along with South America as a whole, has a history of droughts, agricultural losses, and higher ethanol prices in previous La Nina seasons, but the effects this year will be milder and potentially beneficial to industries in some regions.

Agriculture

Despite its conditions set to last throughout the first quarter of 2025, Brazil's 2024-25 crop is expected to hit a record 322.3mn metric tonnes (t), up from 297.8mn t in the previous crop, according to national supply company Conab.

Still, most forecasts rely on previous favorable conditions during the development of the 2024-25 crop.

The soybean crop is set to be 13pc higher than in 2023-24, reaching 166.33mn t. Corn also is expected to increase production, reaching 119.6mn, a 3.3pc rise from the previous crop.

But previous dry weather and low precipitation harmed center-southern sugarcane producers, which are responsible for 91pc of the national sugarcane output. The 2024-25 sugarcane crop is forecast to reach 678.7mn t, a 4.8pc decline from the previous season, according to Conab.

La Nina's conditions may recover some of the sugarcane crop this season. Northeastern sugarcane production, harmed by last year's drought, will face a period of heavy rains brought by the phenomenon in January. But the sugarcane crop is already projected to decline by 30pc from the previous crop regardless, according to northeastern sugarcane producers' association Unida.

The last time La Nina hit Brazil, in 2020-23, roughly 40pc of the main center-south sugarcane crop was at risk from dry weather.

Ethanol

Ethanol production is set to increase by 1.3pc in 2024-25 from the previous season, according to Conab.

Still, sugarcane ethanol is outlined to shrink by 2.8pc thanks to 2024's dry weather and wildfires in the southeast.

Electricity

La Nina's late arrival enabled the summer rainy period in Brazil.

The main hydroelectric reservoirs recovered from last year's drought and will end this month above half of their capacity, according to national grid operator ONS.

Regardless of La Nina's presence, most of the central-southern states are expected to have above-average rains in January-April, according to Inmet. Temperatures are also set to stay above the historical average in the central-western, southeastern, southern and northern states.


Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

25/02/11

California aims to expand alternative bunkers

California aims to expand alternative bunkers

New York, 11 February (Argus) — California lawmakers will consider expanding alternative marine fuels use by ocean-going vessels on the state's coast. State senate bill 298, introduced by state senator Anna Caballero (D), would require the California State Energy Resources Conservation and Development Commission (Energy Commission), the California Transportation Agency and the state board to develop a plan by 31 December 2030 for the use and deployment of alternative fuels at California's public seaports. The plan should identify significant alternative fuel infrastructure and equipment trends, needs, and issues and describe how the state will facilitate permitting and construction of infrastructure to support alternative fuels. The plan should also identify locations for alternative fuel infrastructure, provide a reasonable timeline for its installment and estimate the costs, including public or private financing opportunities. The bill also calls for the Energy Commission to convene a working group consisting of representatives of seaports, marine terminal operators, ocean carriers, waterfront labor, cargo owners, environmental and community advocacy groups, the Transportation Agency, the state board, the Public Utilities Commission, and air quality management and air pollution control districts. The working group will advise the commission. The US territorial waters, including California's, are designated as emission control areas (ECAs). In the ECAs, the sulphur content of marine fuel burned by ocean-going vessels is capped at 0.1pc. Thus ocean-going vessels within 24 nautical miles of California burn 0.1pc sulphur maximum marine gasoil (MGO). Ocean-going vessels could achieve the equivalent of 0.1pc sulphur marine fuel emissions by installing marine exhaust scrubbers. But California has banned their use. California is the only US state that has banned the outright use of marine scrubbers. California also requires that ocean-going vessels while at berth in California ports must either use shore power or use alternative technology such as batteries. The regulation came into force for container ships, reefers and cruise ships in 2023. It came into force this January for tankers visiting Los Angeles and Long beach and for roll on roll off vessels. Starting on 1 January 2027, it will apply to all tankers at berth in all California's ports. US harbor craft vessels (such as barges, commercial fishing vessels, excursion vessels, dredgers, pilot vessels, tugboats and workboats) in California's waters are required to burn renewable diesel (R99 or R100). By comparison, elsewhere in the US, harbor craft vessels are required to burn ultra-low sulphur diesel (ULSD). In January, Los Angeles ULSD averaged at $773/t and R99 at $962/t. By Stefka Wechsler Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Brazil’s January inflation lowest since 1994


25/02/11
25/02/11

Brazil’s January inflation lowest since 1994

Sao Paulo, 11 February (Argus) — Brazil's monthly inflation stood at 0.16pc in January, the lowest increase for the month since 1994 when the government enacted multiple measures to contain soaring inflation, according to government statistics agency IBGE. The consumer price index (CPI) slowed annually to 4.56pc from 4.83pc in December, heavily influenced by a 14.2pc tumble in power costs in January, compared with a 3.19pc drop in December. Power costs decelerated January's inflation by 0.55 percentage points — the major individual contributor to the annual drop, according to IBGE — thanks to a R1.3bn ($224mn) federal discount in power tariffs that month, CPI's manager Fernando Goncalves said. Food and beverage costs rose by an annual 7.25pc, decelerating from 7.69pc in December. Beef costs increased annually by almost 21.2pc following a 20.8pc gain in the month prior, while soybean oil costs decelerated to 24.55pc over the last 12 months from 29.2pc in December. Motor fuels prices rose by 11.35pc in January. Ethanol was responsible for the group's largest annual increase of 21.59pc, up from 17.58pc in the month prior. Gasoline and diesel prices also registered annual rises of 10.71pc and 2.66pc from 9.71pc and 0.66pc, respectively. Still, diesel prices remained at a 0.97pc monthly increase from December, while ethanol costs contracted by 1.82pc from 1.92pc and gasoline prices increased by 0.61pc from 0.54pc. Fuel prices are likely to keep increasing in February, as states increased the VAT-like ICMS tax on fuels and state-controlled Petrobras increased wholesale diesel prices by 6.3pc , both effective as of 1 February. Transportation costs rose by 1.3pc in January over the year, following a 0.67pc gain in December. Flight tickets were the most responsible for the increase, with a 10.42pc monthly gain from a 22.2pc contraction in December. Brazil's central bank is targeting CPI of 3pc with a margin of 1.5 percentage point above or below. The bank raised its target rate to 13.25pc in January after it failed to maintain Brazil's headline inflation under the ceiling of 4.5pc for 2024. Further increases are expected in the coming months, the bank said. The central bank has recently changed the way it tracks the inflation goal. Instead of tracking inflation on a calendar year basis, it will now monitor the goal on a 12-month basis. In 1994, Brazil enacted its Plano Real, a series of measures to stabilize the economy and detain soaring inflation, which had hit an annual 916pc by the end of that year. One of the measures was to change its currency to the real from the cruzeiro real. By Maria Frazatto Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Crude Summit: P66 eyes US northeast renewables: Update


25/02/07
25/02/07

Crude Summit: P66 eyes US northeast renewables: Update

Adds info on SAF, other details. Houston, 7 February (Argus) — US refiner Philips 66 is weighing producing renewable fuels in the northeastern US if more states adopt low carbon fuel standards. The company is considering producing renewables at its 258,500 b/d Bayway refinery in Linden, New Jersey, if state mandates are approved and implemented, vice president of renewables Suresh Vaidyanathan said on the sidelines of the Argus Global Crude Summit Americas in Houston, Texas, on Friday. The renewables could be processed along with traditional fuels at the refinery. Bayway is the largest refinery on the US Atlantic coast. Phillips 66 could possibly produce renewable diesel or sustainable aviation fuel (SAF) at the refinery, depending on the specifics of the state laws, Vaidyanathan said. The company said it is "constantly evaluating all of our assets for lower carbon opportunities." New Jersey senators last year proposed legislation to establish what could be the first US east coast clean fuels mandate. In New York, bills to establish a clean fuel standard now count the majority of the state assembly and senate as co-sponsors. But similar proposals have stalled in prior years, in part because some progressive lawmakers worry about potentially boosting biofuels at the expense of electrification. New York state agencies are separately studying the potential impacts of a "clean transportation standard" but have given no indication of when they could release their findings. Phillips 66's Rodeo renewables plant in California reported throughputs of 42,000 b/d in the fourth quarter of 2024 after beginning full operations last year. Phillips 66 said today it is producing SAF at the Rodeo refinery. United Airlines announced in December that it agreed to buy SAF from Phillips 66's Rodeo facility as soon as the product came online. Phillips 66's renewable fuels business logged a $28mn profit in the fourth quarter of 2024 driven by higher margins at the Rodeo complex and stronger international results. By Eunice Bridges Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Ethanol prices up on uncertainty, low margins in Feb


25/02/06
25/02/06

Ethanol prices up on uncertainty, low margins in Feb

London, 6 February (Argus) — Spot ethanol prices in northwest Europe firmed to a six-month high at the start of February after several months of remaining largely steady. The minimum 64pc greenhouse gas (GHG) savings ethanol spot price reached €700/m³ on 4 February, its highest since 2 August 2024. Despite this, participants are reporting ample supply in the region, sufficient to meet current demand. The gains are largely attributed to a closed arbitrage with the US, higher production costs and ongoing uncertainty surrounding potential US tariffs. Some market participants believe the price rise in the ARA region is partially driven by higher ethanol prices in the US, which have been supported by rising corn prices . These participants said European prices may have tracked US price gains given the closed arbitrage with the country, with expectations that the arbitrage between the regions will reopen as a result of higher ethanol prices in ARA. Looking ahead, some market participants predict that ethanol imports will be reduced in the second quarter, which has caused the ethanol forward curve to shift into contango, with prices peaking at €711/m³ for the second quarter on 5 February. Trump tariffs turmoil Participants said prices are also being supported by uncertainty surrounding US president Donald Trump's plans to impose tariffs on imports from the EU. The European Commission said this week it will respond "firmly" should Trump "unfairly or arbitrarily" impose tariffs on EU goods. Trump made a similar complaint about the UK, but said he thinks "that one can be worked out". Retaliatory tariffs from the EU could affect ethanol flows, as the EU is a net importer of fuel ethanol. It imported almost 69,000t of undenatured ethanol — usually used for road fuel blending in most EU member states — from the US in January-November 2024, according to provisional EU customs data. The UK imported almost 600,000t of ethanol during the same period. The UK can leverage favourable arbitrage opportunities to import ethanol from the US and redirect it to the EU. Producers face higher costs Argus calculations show ethanol production margins for corn and wheat at €168.69/m³ and at €146.71/m³ on 5 February, down from €223.56/m³ and €205.33/m³ a year ago. Variable costs of yeasts, enzymes, chemicals and denaturants are not included in these calculations. Market participants said producers continue to adjust to a poor 2024-25 harvest season in Eastern Europe, caused by unfavourable weather conditions in Ukraine and France. Higher feedstock costs have contributed to higher ethanol prices, although the production margins are still tighter than last year. In Ukraine, Europe's largest wheat exporter excluding Russia, Argus forecasts wheat production will drop to 22.3mn t during 2024-25 , down from a five-year average of 24.7mn t. Corn supply from the country for 2024-25 is projected to fall to 22.9mn t, down from 31.5mn t in the previous season, according to Argus data. France — Europe's largest producer of ethanol — has cut its wheat production outlook for 2024-25 because of wet weather. Rainfall in other parts of Europe has affected corn toxin levels, potentially leading to poorer quality ethanol. This is likely to weigh on ethanol output in 2025 as it will strain feedstock supplies, push production costs up and squeeze margins for producers. More recently, European market participants said a late-winter cold snap may affect winter crops in Ukraine, and if so, strain feedstock supplies and push ethanol production costs up further. It comes as markets are still waiting for an update on level 2 in the nomenclature of territorial units for statistics GHG emission values, the so called Nuts 2 values. Biofuel producer Archer Daniels Midland expects ethanol profit margins to narrow this year, after posting wider margins in the fourth quarter. The company expects ethanol margins to drop to break-even in the first quarter on higher industry run rates, even as robust demand for exports from the US supports improved volumes, it said. ADM is one of the largest exporters of ethanol to Europe, according to those in the market. By Evelina Lungu Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

EU SAF mandate resets US market as credits uncertain


25/02/06
25/02/06

EU SAF mandate resets US market as credits uncertain

Houston, 6 February (Argus) — Looming questions over federal tax credits, supply concerns, and the future of trade flows are causing concerns for US sustainable aviation fuel (SAF) market participants, while buyers address needs in Europe given newly introduced mandates. The domestic SAF market in the US is spurred by incentives in the form of tax credits and subsidies. This "carrot instead of stick" method is meant to bridge the gap between the high cost of investment and production of SAF, making it feasible for airlines to consume and utilize the carbon-abating abilities of the low carbon fuel. The recent expiration of the 40B blenders tax credit has made its mark on the biofuels landscape, eating into the margins of products made with more carbon-intensive feedstocks and altering trade flows on a global level. With importers to the US west coast unable to capitalize on the federally backed incentive, producers like Neste who made up more than half of the SAF market in the US in 2024 direct their Singapore-based volumes elsewhere. US west coast delivered prices during the fourth quarter of 2025 ranged from $4.80/USG to $5.98/USG, reflective of volatility in the conventional jet basis as well as inconsistent supply available at major points of uplift. Prices in the third quarter of 2024 ranged from $4.20/USG to $5.50/USG given greater anticipation of sufficient supply later in the year. Coupled with limited domestic production that decreased from 16.5mn USG in the third quarter to 6.6mn USG in the fourth quarter, the supply of SAF in the US available on a spot basis has dwindled. EU-wide SAF mandates kicked in at 2pc this year, rising to 6pc by 2030. But it is not until 2035 when the obligation hikes up to 20pc — with a 5pc sub-mandate for renewable fuels of non-biological origin — that the region will tip into a short position. The UK is on a similar demand trajectory, going from 2pc this year to 10pc by 2030 and 15pc by 2035, while aiming for a 52pc cap on the SAF total being Hydrotreated Esters and Fatty Acid-based. Combined, this could result in Europe's supply/demand balance going from a 200,000 t/yr surplus in 2030 to a -9.1mn t deficit by 2035, according to Argus Consulting estimates. Given the newly introduced European SAF mandate, air carriers that operate in both regions look to secure volumes at major points of uplift around western Europe. Given the lower supply in the US and fluctuating prices given those changes in supply on the west coast, market activity maintains fixed on the other side of the Atlantic. By Matthew Cope and Amandeep Parmar Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Generic Hero Banner

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more