Brazil will rebuild ethanol stock in the new harvest following a 21% decline in 2025-2026

Analysts and industry data suggest that Brazil's sugar mills and ethanol producers will be strongly prompted to build up ethanol inventories for the harvest of 2026-2027, as biofuel prices are at multi-year highs. Sugar?futures are also hovering around five-year lows.

According to data from Brazil's agriculture ministry, ethanol?stocks totaled 5,81 billion liters on Jan. 15. This is down 20,7% from 7,33 billion liters one year ago.

The shortage has driven the average price of hydrous and anhydrous alcohol?at mills located in Sao Paulo to its highest level in nearly three years.

The global surplus has pushed international sugar prices to a 5-year low.

Mauricio Muruci, analyst at Safras & Mercado, said in an interview that "Ethanol is 30% - 40% more expensive than sugar. This justifies a greater ethanol allocation for 2026/27 when stocks can be replenished throughout the year."

Safras and Mercado?predicts mills will direct 53 percent of sugarcane towards ethanol during the season 2026-2027, which begins in April. This is a reversal of trends observed in the season 2025-2026.

"Stocks have been low since ethanol production in 2025/26 was minimal." The pump prices were always competitive with gasoline, due to the limited supply and strong demand,"?said Julio Maria Borges.

Borges said that stocks were "very low" but added that the supply would recover with the new crop, which would lower prices.

Corn?ethanol continues to grow in market share, and it is expected that the percentage of corn?ethanol will reach a new record high by 2026-2027.

The National Corn Ethanol (Unem) CEO, Guilherme Nolasco, said that the demand for corn-based bioethanol had risen to maintain supply.

Nolasco stated that ethanol from corn and other grains would increase to 12 billion liters during the next season. Reporting by Roberto Samoura, Additional reporting by Oliver Griffin and editing by Chizu Nomiyama.

(source: Reuters)