El Niño is already driving up ethanol prices in Brazil
Frequent rainfall has delayed sugarcane crushing in Brazil, driving hydrous ethanol prices up 37.6% in São Paulo between August and October. Mill supply constraints and extended harvesting plans support further increases, while ethanol remains economical for motorists at 62% of gasoline prices.
Frequent rainfall across much of the Center-South, Brazil’s main sugarcane-producing region, is driving up hydrous ethanol prices. Between August and October, prices paid to mills in São Paulo rose 38%, while pump prices across the state increased 8.6%.
In the week ended October 30, the Cepea/Esalq benchmark for hydrous ethanol paid to mills in São Paulo stood at R$2.8135 per liter, virtually unchanged from the level recorded in the week of April 2, when it was R$2.8875 per liter.
From early April through July 31, the benchmark had fallen by a cumulative 29.2%. Prices began rising in August, and over the following three months the index gained 37.6%.
In Mato Grosso, which also supplies the São Paulo market, prices have risen 21.6% since the first week of August, after falling 28.1% from April through the end of July. In the week ended October 30, ethanol was selling for R$3,119.51 per cubic meter, its highest price since the week of April 30.
At gas stations, ethanol prices have also risen in recent months, but at a slower pace. From mid-August, when pump prices in São Paulo reached their lowest level of the year, through the final week of October, ended October 31, prices climbed 8.6%, according to the National Agency of Petroleum, Natural Gas and Biofuels (ANP).
Before that, however, the decline in ethanol prices had not been fully passed on to motorists either. From April through the end of July, while prices received by mills fell 29.2%, prices paid by drivers in São Paulo dropped 20.1%.
For Tarcilo Rodrigues, director of Bioagência, “delays in sugarcane crushing are the main factor” behind the recent increase in ethanol prices.
The 2026/27 sugarcane crop is facing a contradiction: although a significant volume of cane remains to be harvested, excessive rainfall in major producing regions has made it difficult for machinery to enter fields, leaving large quantities of cane unharvested.
“There is enormous potential in the fields, with a volume of sugarcane that is almost a record. The problem is that the harvest has really fallen behind, and \[the mills\] are unable to crush it,” he said.
Rodrigues believes mills will try to extend the crushing season and may continue processing sugarcane through December 20, depending on weather conditions. “No mill wants to carry cane over [leave it in the fields to be processed in the next crop year]. Everyone will try to crush as much as possible.”
In his assessment, although sugar prices have also recovered, the government subsidy for ethanol has “virtually equalized” the returns mills receive from the two products. “There is not much incentive to produce sugar,” he said.
According to the specialist, there is still room for ethanol prices to rise. “But you always have to keep an eye on how consumers respond,” he said.
Ethanol remains the more economical option for motorists. Last week, a liter of ethanol cost the equivalent of 62% of the price of gasoline. That ratio is below the 70% threshold at which the two fuels deliver equivalent mileage, based on the historical average for Brazil’s flex-fuel fleet, and below the 75% level at which ethanol offers comparable performance in newer vehicles.
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Source : valorinternational
