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Anhydrous ethanol stocks in Brazil's Center-South region as of August 16 stood at 2.75 billion liters, up 16% from same period last year and also up 16% from two weeks prior, data from the Agriculture Ministry showed Tuesday.

The total volume includes ethanol for fuel and industrial usage.

Almost 100% of Brazilian ethanol is produced from the feedstock cane. The 2016-17 sugarcane season in the key Center-South region started April 1. The total ethanol production consists of anhydrous and hydrous, for both fuel and industrial usage.

The majority of the volume of anhydrous is used to blend with gasoline at a proportion of 27%, according to the country's current blend mandate, while the hydrous is used in flex-fuel vehicles.

Owners of flex-fuel vehicles have the option to choose the fuel at pump, usually choosing the cheapest alternative. Hydrous is competitive at the pump when its price is at most 70% of the price of gasoline, due to its energy content.

Since ethanol production began this season through August 16, anhydrous production amounted to 6 billion liters, up nearly 17% on year, data from industry association UNICA showed Tuesday.

Anhydrous production has been favored rather than hydrous due to lower demand for the biofuel hydrous in the domestic market. Lower demand for hydrous translates into higher demand for its competitor gasoline, which is blended with anhydrous.

Hydrous ex-works prices and, consequently, those at pump have been higher this year amid higher sugar prices in both domestic and export markets.

Hydrous inventories as of August 16 totaled nearly 3.1 billion liters, down 7% year on year, data from ministry showed.

Cumulative hydrous production this season was down 3% year on year at 8.7 billion liters as of August 16, UNICA data showed.

On the demand side, anhydrous sales to the domestic market in the first seven months of the year were up 5% year on year at 4.8 billion liters in the Center-South, recent data from the National Petroleum Agency (ANP) showed. Hydrous demand, by contrast, was down 13% year on year at 7.9 billion liters.