Ethanol and sugar drive Brazilian agribusiness
Brazil’s ethanol exports fell 9% in 2025 to 1.7 billion litres as strong domestic demand, higher blending mandates and low inventories curtailed exportable supply. With mills prioritising the more lucrative local market, exports are expected to remain limited in 2026, while sugar continues to underpin cash flows despite softer price outlooks.
Although it may seem significant, the volume of ethanol exported by Brazil in 2025 — around 1.7 billion liters — reflects a contraction. The figure shows a 9% drop from 2024, when foreign sales reached 2 billion liters. The decline, however, is not linked to a lack of buyers but rather to limited exportable supply, driven by strong domestic demand and historically low inventories.
In value terms, Brazilian ethanol exports totaled US$ 976.6 million in 2025, down 8% from US$ 1.13 billion in 2024.
Traditionally, the domestic market absorbs most of the country’s ethanol production. In 2025, internal consumption reached about 19 billion liters of hydrated ethanol (sold directly at fuel pumps) and 13 billion liters of anhydrous ethanol (blended into gasoline). The mandatory blending rate for anhydrous ethanol in gasoline increased from 27% to 30% as of August 1, 2025, which is expected to further boost domestic demand. Experts estimate the new blend will consume an additional 1 billion liters per year.
In addition, ethanol inventories at mills in Brazil’s Center-South region fell sharply during the 2025/2026 harvest. According to União da Indústria de Cana-de-Açúcar e Bioenergia (Unica), stocks on January 1 totaled 7.07 billion liters, a 19.7% decrease compared to the same period in 2025.
With national ethanol production also down by about 5%, totaling 30.84 billion liters, hydrated ethanol output dropped 8% to 19 billion liters, while anhydrous production remained relatively stable at 11.7 billion liters. Together, these factors significantly reduced the surplus available for export.
International trade
In international trade, South Korea remains the leading buyer of Brazilian ethanol. In 2025, the country imported 772 million liters, well ahead of the United States, which imported 255 million liters, and the Netherlands, which imported 212 million liters.
“For about 15 years, South Koreans have been Brazil’s main customers, driven by an energy policy more open to biofuels and a preference for lower-carbon products, a characteristic of sugarcane ethanol,” explained Maurício Muruci, an ethanol, sugar, and biodiesel analyst at Safras & Mercado.
According to him, the ranking may change in 2026. “The Netherlands should take second place, favored by tax issues that could further reduce the United States’ share,” he said. The U.S. government is also considering expanding mandates for domestically produced biofuels, which could limit imports.
Although corn ethanol has gained ground in the domestic market in recent years, production volumes are still insufficient to significantly increase supply. In the 2025/2026 harvest, corn accounted for 18% of national biofuel output, while sugarcane remained dominant at about 81%.
In absolute terms, Brazil produced roughly 2.6 billion liters of corn-based anhydrous ethanol, compared to 11.7 billion liters from sugarcane. For hydrated ethanol, corn accounted for 4.2 billion liters, versus about 19 billion liters from sugarcane.
Given this scenario, exports in 2026 are expected to remain limited, with a slight recovery to around 1.75 billion liters, according to Safras & Mercado. The forecast reflects the mills’ strategy to focus on the domestic market, where scale is larger and prices are more attractive.
Sugar supports mills’ cash flow
In the 2025/2026 harvest, sugar’s strong performance continued to sustain mills’ cash flow. In this segment, exports are more relevant than domestic sales. Each year, 30 to 33 million tonnes are shipped abroad, compared to 9.5 million tonnes consumed domestically.
With stronger ethanol demand expected, the traditional production mix — usually around 52% ethanol and 48% sugar — is expected to shift slightly next season to 53% ethanol and 47% sugar. Estimates suggest mills can earn 25% to 30% more selling ethanol domestically than producing sugar for export.
Safras & Mercado projects sugarcane crushing will reach 610 million tonnes in the 2026/27 harvest, up from 605 million tonnes in 2025/26. Average sugar prices, however, are expected to decline from 17–19 cents per pound in 2025 to 13–14 cents per pound throughout 2026.
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Source : Datamar News
