A surge of multibillion projects is reshaping Brazil’s energy and agriculture landscape, with corn ethanol emerging as one of the fastest-growing bets in the country. Cheap corn and rising demand are fueling the sector’s expansion, leading companies into a new investment cycle.
Inpasa, Brazil’s top corn ethanol producer, announced a joint venture with Amaggi, one of the country’s largest grain traders, to build at least three new plants in Mato Grosso, the nation’s leading grain-producing state. The projects are expected to require as much as 6 billion reais ($1.1 billion).
In neighboring Goiás, Grupo Planalto will add two more units with 1.8 billion reais in investments, while São Martinho — a sugar and cane ethanol giant — is allocating 1.1 billion reais to expand its corn ethanol operations in the state. Further south, in Paraná, Grupo Potencial plans a 2 billion-real facility.
These projects add to 21 others tracked by Itaú BBA through July, amounting to 23 billion reais. Together, they could lift corn ethanol output more than 50% in just two years, pushing supply from 8.2 billion liters in the 2024/25 crop year to 12.1 billion liters in 2026/27, according to the bank.
“We are creating the largest agro-industrial cluster Brazil has seen in the past 30 years,” said agribusiness consultant Carlos Cogo at an event last week.
The investment boom rests on four main drivers, said Marcos Rubin, CEO of consultancy Veeries: the increase in mandatory blending of ethanol in gasoline to 30% from 27% in August; lower implementation costs compared with sugarcane ethanol mills; growing output of Brazil’s “safrinha” second-crop corn; and cheaper financing options for renewable energy projects.
By 2030, Brazil’s corn ethanol production is set to jump nearly 80% to 16 billion liters, according to Veeries. That will make the biofuel the main source of growth in domestic corn demand, spurring total output to rise from 137 million tons today, according to Conab’s figures, to 170 million tons by the end of the decade.
Cogo goes even further: “In ten years, Brazil will need to produce 200 million tons of corn to meet total demand,” he said. For ethanol alone, he projects consumption of the grain will more than double, from 24 million tons today to 53.3 million tons in the 2034/35 season.
As production and consumption patterns shift, corn pricing is also changing, with higher values emerging in the Center-West, home to most new ethanol projects.
This year, Mato Grosso corn is trading at 90% of Parana prices — the southern state that is a hub for poultry and hog farming as well as home to the export port of Paranagua. Between 2010 and 2018, before Brazil’s corn ethanol boom, that ratio stood at 63%, according to Rubin.
