Ethanol Deficit Soars After 14 Years Amid Frustrated Harvest and Rising Imports

Written by Caio Aviz

Published on 02/10/2025 at 13:20

Imagem representa o déficit histórico de etanol no Brasil em 2025, causado pela queda na safra de cana e aumento de importações.

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Historic Scenario in the Biofuel Market

The Brazilian ethanol market is expected to record its first deficit in 14 years in 2025/26, according to Veeries’ estimate.
The difference between production and consumption is projected to be negative by 890 million liters by the end of the 2025/26 harvest.
In the Center-South, the largest producing region, the surplus is expected to drop to 2 billion liters, the lowest since 2016/17.

Production Below Expectations and Rising Prices

The deficit — the first since 2011, when there was a severe sugarcane crop failure — does not indicate shortages, according to Fabio Meneghin, a partner at Veeries.
However, tighter supply is likely to keep prices high.
In September 2025, hydrous ethanol rose 4% in Brazil, while gasoline varied only 0.6%, according to ANP.
As a result, the share of hydrous ethanol dropped to 30.8%, down from 32% recorded in the same period of 2024.

Impact of the Sugarcane Harvest and Growth of Corn

The increase in ethanol prices reflects successive disappointments in the sugarcane harvest.
Production is expected to end 2025 with at least 2 billion liters less than anticipated, equivalent to one month of consumption.
Compared to the previous harvest, the reduction could reach 3 billion liters.
On the other hand, corn ethanol has grown above expectations, totaling 9.1 billion liters in 2025.
This growth represents an increase of 1 billion compared to the previous cycle.
Nonetheless, this increase does not cover the deficit left by sugarcane biofuel.

ARTICLE CONTINUES BELOW

Rising Imports and Market Reaction

With the tightening of supply and demand, ethanol imports have become more attractive.
Between April and August 2025, Brazil imported 150 million liters, a volume higher than the average of the last five years.
Despite this, Meneghin points out that the impact is limited.
The capacity to expand the alcohol mix in the mills is reduced.
Additionally, the mandatory ethanol blend in gasoline increased from 27.5% to 30% in August 2025.
This factor contributed to the price pressure.

Outlook for 2026/27

The projected deficit may extend until March 2026.
However, the anticipation of the next harvest’s crushing could mitigate the impacts.
According to Veeries, total ethanol production is expected to grow 15% in 2026/27, reaching 41.8 billion liters.
Sugarcane production is expected to recover the 2 billion liters lost in 2025, reaching 28.3 billion liters.
This growth represents an increase of 8%.
Meanwhile, the supply of corn ethanol is expected to advance 35%, reaching 13.2 billion liters.
In this scenario, the market share of hydrous ethanol could approach 35% of national consumption again.

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Ethanol Deficit Soars After 14 Years Amid Frustrated Harvest and Rising Imports

Historic Scenario in the Biofuel Market

Production Below Expectations and Rising Prices

Impact of the Sugarcane Harvest and Growth of Corn

Rising Imports and Market Reaction

Outlook for 2026/27

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Ethanol Deficit Soars After 14 Years Amid Frustrated Harvest and Rising Imports

Historic Scenario in the Biofuel Market

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Outlook for 2026/27

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