Brazil’s ethanol industry is signaling that it is fully prepared to meet a surge in demand as the government moves to increase the mandatory ethanol blend in gasoline from 30% to 32% later this year.
According to industry analysts and trade groups, the timing for this transition is ideal, as mills are currently entering the early stages of the harvest and can still adjust their production schedules to prioritize biofuel over sugar.
Key highlights of the expansion:
- Record-Breaking Projections: Total ethanol production in Brazil—combining both sugarcane and corn-based sources—is forecasted to reach a historic 44 billion to 44.5 billion liters this season. This represents a 15% increase over the previous year.
- The “Production Mix” Shift: Analysts at Safras & Mercado have already adjusted their forecasts, predicting that mills will now dedicate roughly 54% of their sugarcane crop to ethanol production (up from 51% last year) to account for the new government mandate.
- The Rise of Corn Ethanol: While sugarcane remains the primary source, the corn ethanol sector is playing a critical role in the expansion. Corn-based biofuel is expected to provide roughly half of the additional 2 billion liters required to meet the new 32% blend requirement.+1
- Economic & Strategic Context: The push for higher domestic ethanol blends comes amid fluctuating global oil prices and a broader national strategy to reduce carbon emissions. Industry leaders from Unica (sugarcane) and Unem (corn) have reassured the market that there is no risk of a supply shortage.+1
- Timing the Market: Because the government’s announcement coincided with the start of the harvest, producers have the flexibility to pivot their operations before they are “locked in” to sugar production contracts, ensuring the market remains well-supplied.
This move reinforces Brazil’s position as a global leader in biofuels, demonstrating the country’s ability to leverage its dual-crop (corn and cane) system to maintain energy security while scaling up its green energy mandates.