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Hydrous ethanol prices in Brazil reached their highest price in nearly seven months on Thursday.

S&P Global Platts assessed domestic hydrous ethanol ex-mill Ribeirao Preto at Real 2,200/cu m ($691/cu m), Real 70 higher day on day. The assessment marks the highest price for hydrous ethanol since March 14, when it was assessed at Real 2,225/cu m.

Hydrous ethanol prices have risen Real 390/cu m since September 1.

Much of the increase has been attributed to tighter supplies of the fuel. Higher sugar margins have enticed mills to divert more of the sugar crop to sugar production and away from ethanol production than in previous years. Ethanol production is projected to be 10% lower year on year.

Market sources have said recently that prices would continue to rise as long as demand was strong while producers made few offers. However, a source on Thursday said that prices may be at a tipping point.

"We are seeing much more offers at this time," the source said. "Probably some producers will have to reduce [prices] a little bit in the next days to sell. There's no demand right now."

Hydrous ethanol is primarily used in flex-fuel vehicles. The Brazilian government requires that anhydrous ethanol, in which water has been removed from the fuel, is blended with gasoline at a ratio of 27% ethanol to 73% gasoline.