Brazil ethanol output on the rise

Ethanol production in Brazil’s center-south region is expected to total 30.9Bl (billion liters) in the 2023-24 crop, up 6% on a year earlier, Beatriz Pupo, a senior biofuel analyst at S&P Global Commodity Insights, told BNamericas. 

It will be the first time in two years where center-south output surpasses the 30Bl mark, with the growth mainly driven by corn ethanol, production of which is estimated at 5.4Bl in 2023-24, up 24%.

S&P Global’s current sugarcane crushing estimate for 2023-24 remains virtually unchanged at 586Mt. 

“This can still change depending on weather, as well as the relative prices of sugar and ethanol until the start of the next crop,” Pupo said. 

She added that, with cumulative rainfall so far this year 45% higher than the same period 2021, mills were able to increase renovation of fields by up to 10%, which could potentially reduce the average age of the cane in 2023-24, pending plantings in the coming months. 

Ethanol is a key fuel in Brazil's transportation segment. While anhydrous ethanol forms gasoline C, combined with gasoline A, hydrated ethanol is used in flex-fuel vehicles that can run both on gasoline and ethanol. 

LONG-TERM OUTLOOK

The supply of ethanol in Brazil should grow between 18% and 53% by 2032 in low and high scenarios from 34.5Bl in 2023 to 40.7Bl and 52.9Bl, respectively, according to projections by federal energy research company EPE. 

The medium scenario foresees 35% growth to 46.8Bl in 2032.  

In all scenarios, sugarcane will continue to be the main raw material for ethanol production, with corn increasing its share significantly. 

Source: EPE

According to the EPE study, the investments necessary for the increase in ethanol production over the next decade vary between 12.3bn reais (currently US$2.3bn) and 29.5bn reais in the case of first generation (1G) sugarcane ethanol, and between 3bn reais and 10bn reais for second generation (2G) ethanol. 

For corn ethanol, the capex projected until 2032 is between 7.5bn reais and 15.9bn reais.