Nov 17, 2022

Corn Ethanol Expansion Will Utilize More of Brazil's Corn

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Domestic corn consumption in Brazil is expected to increase in 2023 due to increased production of corn ethanol and expanded livestock production. Construction of new corn ethanol facilities and the expansion of existing facilities continues unabated in Brazil.

Brazil currently has 18 corn ethanol facilities with 9 under construction. Mato Grosso has the most facilities at 10 followed by Mato Grosso do Sul and Goias. Mato Grosso is also the largest corn producing state in Brazil. The Mato Grosso Institute of Agricultural Economics (IMEA) is estimated that Mato Grosso produced 41.6 million tons of corn in 2021/22 and that 7.6 million tons will be used to produce ethanol during the period from July 2022 to June 2023.

IMEA is estimating that farmers in Mato Grosso will increase their 2022/23 safrinha corn acreage 3.7% to 7.42 million hectares (18.3 million acres). IMEA is estimating a 2022/23 statewide corn yield of 104.2 sacks per hectare (99.4 bu/ac) with a production of 46.4 million tons. The increase is corn production is the result of strong international corn prices and the demand for corn from new and expanded corn ethanol facilities.

In 2022, Brazil is expected to produce approximately 5 billion liters of corn ethanol (approximately 15% of Brazil's total ethanol production) and that is expected to increase to 8 billion liters by 2027/28. The National Union of Corn Ethanol (UNEM) estimates that corn could account for 20% or more of Brazil's ethanol production by the year 2030.

Brazil's corn ethanol facilities include facilities that utilize only corn and a number of sugar mills that have been retrofitted and expanded to utilize corn during the summer rainy season when sugarcane is not available. These facilities would normally close for several months between December and March, but since they have been retrofitted to utilize corn, they operate year-round.

In addition to increased production of corn ethanol, increased production of poultry and hogs is also driving up demand for corn. Poultry and hogs account for approximately 75% of the corn used for animal rations in Brazil.

Brazil's domestic consumption of corn in 2023 is expected to be between 79 and 82 million tons compared to 77 million tons in 2022.

Farmers in Mato Grosso had sold 83.5% of their 2021/22 corn production by the end of October for an average price in October of R$ 67.27 per sack (approximately $5.90 per bushel). For the 2022/23 corn crop which farmers will plant early next year, farmers in Mato Grosso have sold 18.8% of their anticipated production for an average price during October of R$ 68.25 per sack (approximately 5.95 per bushel).