Brazilian ethanol producers could face another challenging year in 2027, with record sugarcane production and expanding corn-based ethanol capacity expected to push supplies beyond domestic demand, according to projections by market intelligence firm Veeries, TheAgriBiz reported.
Brazil’s total ethanol production is forecast to increase 10 per cent to 46.3 billion litres in the 2027/28 season, while domestic consumption is expected to grow 6 per cent to 41.2 billion litres. The resulting supply surplus could keep ethanol prices below production costs for several months, squeezing sugar mills’ margins.
Sugarcane crushing in Brazil’s Center-South region is projected to reach a record 670 million tonnes, up 9 per cent year-on-year. The forecast includes 25 million tonnes of carryover cane and an additional 30 million tonnes from productivity improvements.
Mills are expected to allocate 49 per cent of cane towards sugar production, taking output to a record 43.1 million tonnes, with exports projected at 34.5 million tonnes. Meanwhile, seven new corn ethanol plants scheduled to begin operations in 2027 could add at least 2.5 billion litres of capacity.
Veeries partner Fabio Meneghin expects the increased availability of ethanol to put renewed downward pressure on prices when the next crushing season begins in April 2027. Hydrous ethanol prices could remain below production costs for several months, creating a significant challenge for sugarcane-based producers.
Although corn ethanol manufacturers are also likely to face weaker prices, their relatively lower production costs could provide some protection against prolonged negative margins. However, a poor second corn crop, known as safrinha, could increase feedstock costs and erode that advantage.
The outlook comes even as Brazilian sugar mills have seen some improvement in profitability following the recovery in sugar prices. Sugarcane mill margins rose to around $4.86 per tonne in October from nearly zero in July, although they remain below levels recorded in the previous season.
