Brazil to rebuild ethanol stocks in new harvest after 21% drop in 2025-2026
Brazil's sugar and ethanol mills should see strong incentives to rebuild ethanol inventories in the 2026-2027 harvest as prices for the biofuels hit multi-year highs and sugar futures hover at five‑year lows, according to analysts and industry data.
Ethanol stocks in Brazil's center-south, the country's economic powerhouse, totaled 5.81 billion liters as of Jan. 15, down 20.7% from 7.33 billion liters a year earlier, according to the data from the agriculture ministry.
The shortfall has pushed average prices for hydrous and anhydrous ethanol at mills in Sao Paulo state to their highest level in almost three years.
International sugar prices SBc1 hit a five‑year low on Wednesday, pressured by a global surplus.
“Ethanol prices are running 30% to 40% higher than sugar, which justifies a higher ethanol allocation in 2026/27, when stocks could be replenished over the course of the year,” Safras & Mercado analyst Mauricio Muruci said in an interview.
Safras & Mercado forecasts that mills will direct 53% of sugarcane to ethanol in the 2026-2027 season, which starts in April, reversing trends seen during the 2025-2026 season.
“Stocks are low because ethanol production was minimal in 2025/26. Pump prices were competitive with gasoline the whole time, with restricted supply and firm demand,” said Julio Maria Borges, a partner at consultancy JOB Economia.
Borges described stocks as “very low,” but said supply should recover in the new crop, which would put downward pressure on prices.
At the same time, corn ethanol, which is produced year‑round and does not depend on the cane harvest, continues to gain market share and is expected to hit another record in 2026-2027.
“With a very tight market, low stocks and corn ethanol responsible for a large share of national production, demand for corn‑based ethanol has increased to maintain supply,” said Guilherme Nolasco, CEO of the National Corn Ethanol Union (Unem).
Ethanol from corn and other grains will rise to 12 billion liters in the new season, Nolasco said.
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