Brazil on track for ethanol production jump in 2026
Healthy ethanol prices, expansion of corn ethanol plants and an expected large sugarcane crop will lead to a jump this year in output of the biofuel in Brazil, the world's second-largest producer, analysts and commodities traders said on Tuesday.
They said during a panel at the Dubai Sugar Conference that the increased output this year will be due to the combination of Brazilian sugarcane processors switching to make more ethanol and less sugar and new corn processing plants coming online.
Sugarcane mills, which have the flexibility to produce more sugar or more ethanol, are dealing with low global sugar prices, with the raw sugar contract in New York hovering around a five-year low.
"There is clear incentive for mills to start the new season making more ethanol," said Guilherme Nastari, a director at sugar consultancy Datagro.
Current ethanol prices in Brazil, he said, are trading at large premiums over New York sugar, with anhydrous ethanol at the equivalent of 19.73 cents per pound and hydrous ethanol at 17.96 cents/lb, while ICE raw sugar closed on Tuesday at 14.63 cents/lb.
The new Brazilian sugarcane harvest kicks off around March.
"The initial (sugar/ethanol) price parity is much in favor of ethanol," said Jeremy Austin, general director at Sucden's Brazilian arm.
Sugar and ethanol consultancy CovrigAnalytics believes mills will focus on ethanol until at least around the middle of June.
BP Bioenergy, the Brazilian sugar and ethanol division of bp that manages 11 mills, will plan its production mix as the year progresses, looking at prices, said Ricardo Carvalho, the division's commercial director.
Rabobank projects more than 3 B liters of additional corn ethanol capacity will come online in 2026.
U.S.-based broker StoneX estimates Brazil's combined cane and corn ethanol production will grow 7.9% in 2026/2027 (April-March) to 36.5 B liters, with cane ethanol up 4.4% and corn ethanol up 17%.
The extra ethanol production might be too much for the local Brazilian market, Carvalho said.
It may drive an increase in exports, CovrigAnalytics noted.
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