Brazil’s corn-ethanol industry is heading into its first stress test this year as a sharp and sustained increase in supply is set to push down prices for the biofuel in 2026, potentially delaying some recently announced projects.
Corn-ethanol output in the 2025/26 season is expected to approach 10 billion liters, up from 8.2 billion liters in 2024/25, according to Unem, the national corn-ethanol association. The growth in supply, combined with lower oil prices, is likely to weigh on ethanol prices. That could alter the internal rate of return of new projects — a challenge for some groups at a time of high interest rates.
“Maybe one or two projects won’t go ahead,” said Marcos Rubin, founder of market intelligence firm Veeries.
Brazil currently has 24 corn-ethanol plants in operation. Another 16 facilities have already been authorized, while 17 more have been announced. Veeries estimates that 70% to 75% of the ethanol volume projected from these projects is linked to established players, including large corn-ethanol producers and agricultural trading houses looking to enter the market.
The remaining roughly 25% of projects were announced by regional or new entrants “that may not have the same corporate structure behind them,” Rubin said.
Even so, most of the planned plants belong to companies with long-term strategies and stronger capital structures. Tighter margins may delay some investments, but expansion is set to continue.
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“We see this as an industry that is already solid and still growing. It may not grow as fast as it looks today, but it will continue to expand,” Rubin said. “That doesn’t mean margins are guaranteed.”
A similar view is shared by Carlos Cogo, founder of market intelligence firm Cogo. “Oil at $55 a barrel squeezes ethanol margins, both for corn and sugarcane. Both will suffer,” he said. “But corn ethanol will remain more competitive than sugarcane ethanol because its costs are much lower.”
Corn Crop Outlook
Brazilian supplies of corn, the main cost component for corn-ethanol plants, are seen ample in 2025/26, helping to keep expenses under control.
Veeries projects a 5% increase in planted area for Brazil’s second corn crop, while state-owned forecaster Conab expects growth closer to 4%. Despite delays in soybean planting — which could narrow the window for safrinha corn — Rubin said this is not a major concern.
“The overall calendar for second-crop corn is better than last season, when yields reached a record high because the rains lasted longer”, he said. The key uncertainty now is how weather conditions will unfold in 2026.
Conab estimates Brazil’s total corn production at 139 million metric tons in 2025/26, down 1.5% from the previous season, with about 110 million tons coming from the second crop.
