Feb 03, 2023

Corn Ethanol Production Continues to Increase in Brazil

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

The production of corn ethanol continues to expand in Brazil particularly in the state of Mato Grosso. Conab estimates that Mato Grosso is responsible for 73% of Brazil's corn ethanol production and it is expected to increase 11.9% in 2022/23 to 3.335 billion liters. For all of Brazil, Conab expects corn ethanol production to increase 30.7% in 2022/23 to 4.5 billion liters.

The first corn ethanol facility in Brazil began producing ethanol in 2017 in the city of Lucas do Rio Verde in south-central Mato Grosso. That facility has since been expanded and numerous other corn ethanol facilities are under construction in central Brazil where there is a surplus of corn production.

Part of the expansion in corn ethanol production has been the retrofitting of sugar mills to utilize corn when sugarcane is not available during the summer rainy season from December through March. Traditionally, sugar mills would close down operations during those four months, but many mills can now operate twelve months of the year by utilizing corn in addition to sugarcane.

An example is Sao Martinho's facility in Quirinopolis, Goias which utilized only sugarcane to produce ethanol until now. By the end of February, the facility will start utilizing corn as well as sugarcane. By utilizing corn, the capacity of the facility will increase 220 million liters to 650-670 million liters annually.

The increased production of corn ethanol is needed because in March the percentage of ethanol blended into Brazilian gasoline is scheduled to increase to 15% (B15).

By 2030, it is estimated that corn ethanol production in Brazil will be 10 billion liters annually, which could account for as much as 25% of Brazil's total ethanol production. The steady demand for corn will help to support and stabilize corn prices for producers in central Brazil. It will also help to hold down the cost of the fuel because it is cheaper to produce ethanol in central Brazil than it is to truck the fuel in from southern Brazil.