Ethanol Business Gains Momentum in Brazil as Prices Hold Firm into Early 2026
Brazil's ethanol market saw strong sales growth and sustained price increases at the end of 2025, with firm demand supporting prices into early 2026 despite challenges ahead.
- • Ethanol business volumes increased significantly in Centro-Sul Brazil in late 2025, especially in São Paulo.
- • Hydrated ethanol rose 43% in sales, anhydrous ethanol nearly tripled, with prices reaching around R$3.00 per liter.
- • Firm prices expected through the 2025/26 offseason due to elevated demand and lower stocks.
- • Challenges loom for the 2026/27 harvest, with risk of ethanol price declines amid higher production and a global sugar surplus.
Key details
As 2025 concluded, Brazil's ethanol market in the Centro-Sul region experienced a notable uptick in trading volumes, driven largely by São Paulo’s sharp rise in sales. According to data from Cepea, anhydrous ethanol sales in São Paulo nearly tripled, while hydrated ethanol sales grew by 43% in a weekly comparison. This surge contributed to increased liquidity in the fuel market and sustained price levels during the early days of January 2026.
The CEPEA/ESALQ indicator recorded hydrated ethanol prices at R$ 2.9561 per liter, a 0.9% increase, while anhydrous ethanol prices rose 0.59% to R$ 3.3688 per liter. This price resilience is expected to continue during the 2025/26 offseason due to strong demand coupled with reduced inventories.
Looking ahead, the 2026/27 sugarcane harvest presents challenges, with forecasts indicating approximately 625 million tons of cane will be processed in the Centro-Sul region, alongside a growing share of ethanol production derived from corn. While this diversification may boost overall ethanol output, market analysts warn of potential downward pressure on ethanol prices caused by increased supply versus demand.
Additionally, a global sugar surplus is anticipated, which may negatively influence ethanol prices since both commodities compete in the same agricultural landscape. Yet, despite these factors, the near-term outlook remains positive, supported by healthy sales activity and firm pricing in the Brazilian ethanol sector.
This growth phase of the ethanol business illustrates Brazil's dynamic biofuel landscape, where supply factors, demand trends, and broader commodity market conditions intertwine. The ongoing engagement of major players, such as Petrobras's biodiesel contracts and BP's biofuel ventures, further indicates a sector in evolution toward sustainability and expanded production capacity, although these developments do not directly impact the ethanol market's pricing data as of early January 2026.
This article was synthesized and translated from native language sources to provide English-speaking readers with local perspectives.
