Brazil corn ethanol boom covers the demand as the country increases its biofuel mandate

Brazil's corn-based ethanol industry has grown to meet the growing demand in the country for renewable fuels. This is due to a government mandate that encourages the use of more ethanol as a gasoline additive.

According to UNICA, the sugar and ethanol group, Brazil is the largest producer of sugarcane ethanol in the world. However, the output has been flat since the turn-of-the decade while corn ethanol has tripled.

According to a UNICA report, the corn ethanol production in Brazil's central-south region increased by 31% over the previous year to 8,19 billion liters.

Brazil's government has approved an increase in the blend of ethanol required to be used with gasoline from 27% to 30%. This will require more than 1 billion liters per year.

"Thanks for corn ethanol, you're increasing the blend up to 30% right?" We wouldn't have been able to implement the policy if it wasn't for this increased production," said GuilhermeNolasco, President of the corn-ethanol industry group UNEM.

The Brazilian government delayed increasing the ethanol content in gasoline for this year due to fears that it would increase prices. Officials had already marketed the move as a means to lower prices at the gas pump by the time they confirmed it this week.

Amance Boutin said that the decision to implement a new biofuel mandate in August was a vote for confidence in the ability of the corn ethanol industry to continue ramping up its production.

Gabriel Barra is the director of Latin American equity analysis for oil, gas, petrochemicals, and agribusiness for Citibank.

Barra stated that "Sugar is going to continue to be a major part of the mix in sugarcane processing." "Ethanol is likely to continue losing this competition."

Citi predicted in March that corn ethanol production would reach 16 billion liters in Brazil by 2032. This sentiment was echoed UNEM's Nolasco.

Nolasco stated that "we have the ability to double our current production by 2032."

UNEM estimates that corn ethanol accounts for 23% of Brazil's current ethanol output and expects this to increase to 40% over the next decade.

UNICA Chief Executive Evandro Gussi stated that Brazil does not care whether the ethanol is made from corn, sugar or any other source as long as there are low carbon emissions.

"In terms biofuel and alcohol. Brazil is not a land of "either" - this or that," Gussi said, adding that he expects both corn-based and cane-based production to increase.

Some corn producers in Brazil are already pushing for the expansion of other crops to be used in ethanol production.

sorghum a viable option

Farmers who miss the planting period for the second corn harvest of the country will be penalized.

Cesar Barros of CTC sugarcane research, the CEO of the company, blamed the recent slump on a lack innovation.

Barros noted that corn, on the other hand, has been the beneficiary of years of research and innovation by major multinationals. The U.S., the world's largest ethanol producer is a fan of corn.

Barros stated that sugar cane productivity stagnated in the same period of 20 years as corn, and average productivity increased very little.

CTC, after years of research and development, announced in April the launch of several new products, which it claims will double sugarcane production on Brazilian farms by 2040.

Barros stated that "doubling sugarcane production in the next twenty years will... allow new investments in new plants, or to increase capacity."

(source: Reuters)