Brazil’s corn ethanol industry could account for one-third of the country’s total ethanol production as early as 2028, two years sooner than most market forecasts, according to new estimates from StoneX released this week.
Corn-based ethanol represents about 27% of Brazil’s output in the current 2026/27 season and is expected to reach 33.6% in 2027/28, driven by eight new plants scheduled to start operations and five capacity expansions, StoneX risk-management consultant Lígia Heise said.
The consultancy expects corn ethanol’s share to rise to 28% in 2026/27 before accelerating the following season.
Production capacity is projected to start April 2027 at 38,900 cubic meters a day and reach 51,200 cubic meters a day by the end of March 2028, StoneX said.
That would lift corn ethanol production to 13.6 billion liters in the 2027/28 season, up 29.7% from a year earlier.
Sugarcane ethanol production, by contrast, is expected to reach 26.9 billion liters in 2027/28 and has remained relatively stable in recent years. That means corn ethanol is poised to be the main driver taking Brazil’s overall output to successive records.
StoneX expects total ethanol production to rise from 33.7 billion liters in 2025/26 to 37.8 billion liters in 2026/27 and 40.5 billion liters in 2027/28.
Demand Challenge
The rapid supply growth raises a key question for the industry: where the additional ethanol will be consumed.
“We will have almost 3 billion more liters of ethanol coming onto the market from 2027 to 2028, creating a significant need for additional demand,” Heise said.
StoneX analyst Letícia Correa said the expected increase in supply has not yet raised major concerns over prices because demand should respond more strongly in 2027.
Data from the second half of 2026 already point to improving consumption of hydrous ethanol, the fuel used directly in flex-fuel vehicles, she said. Demand could strengthen further if ethanol becomes more competitive against gasoline, with StoneX expecting the price parity between the two fuels to improve by seven percentage points.
For anhydrous ethanol, which is blended into gasoline under a government mandate, consumption will depend more heavily on future blending requirements.
Brazil’s gasoline blend is currently E32, meaning 32% anhydrous ethanol. The mandate is temporary for six months through January and can be extended for another six months.
StoneX estimates anhydrous ethanol consumption at 14.75 billion liters in the current 2026/27 season.
If E32 remains in place through August 2027, consumption would rise 3.7% year-on-year by the 2027/28 season, adding about 550 million liters of demand.
If Brazil instead adopts an E35 mandate, with 35% ethanol in gasoline, in August 2027 — a move backed by the biofuels industry — StoneX estimates anhydrous ethanol consumption would increase 10.3%, adding 1.52 billion liters of domestic demand by 2027/28.
If the mandate returns to E30 in August 2027, however, domestic consumption in 2027/28 would fall 0.6%, reducing demand by about 90 million liters.
This story was translated from the original Portuguese with the assistance of artificial intelligence and reviewed by The AgriBiz editorial staff.
