The huge volume of ethanol produced by mills from Center-South Brazil during the first official month of the 2016-17 crop has increased selling pressure, triggering lower prices at the pumps.

Ethanol production totaled 2.77 billion liters in April, up 62.35% year on year, according to official data released Monday by industry association UNICA.

Hydrous ethanol made up 66% of total production at 1.85 billion liters, up 41.82% year on year. Hydrous ethanol is used in Brazil as a standalone biofuel (E100) in flex-fuel vehicles.

The balance, or 928 million liters, was anhydrous ethanol, which saw production climb 128.07% from a year earlier. The anhydrous ethanol blend in Gasoline A increased to 27% from 25% in March 2015.

Over the first quarter of 2016 hydrous ethanol was not competitive against the gasoline price, supporting increased anhydrous production and sales during the period.

From January 1 to March 31, hydrous price parity against gasoline averaged 75.3% in the Southeast region, the country's largest consumer region.

To be more competitive than gasoline in Brazil, E100 has to be below 70% of the price of gasoline.

As 2016-17 production started to reach the spot market, ex-mill prices plunged, falling 28.25% to Real 1,600/cu m on May 13 from Real 2,230/cu m on March 1.

Weaker domestic hydrous ethanol ex-mill prices translated into more competitive retail prices in southeast Brazil in the week ended May 14, data from the National Petroleum Agency, or ANP, showed Monday.

Hydrous ethanol's price parity against gasoline slipped for the sixth consecutive week after reaching a peak of 77% in the week ended April 2.

Southeast region hydrous ethanol averaged 65.9% of the price of gasoline, down from 66.9% the previous week, the data showed.

In April, hydrous ethanol sales by Center-South mills fell 19.02% from the previous year to 1.18 billion liters, while anhydrous ethanol rose 14.44% to 783 million liters on the period, UNICA showed.