EU-Mercosur Trade Deal Boosts Brazilian Ethanol Stocks and Expands Mato Grosso do Sul Exports

Brazil's ethanol industry and the state of Mato Grosso do Sul are witnessing positive developments following the EU-Mercosur free trade agreement. On the B3 stock exchange, ethanol producer shares surged: Raízen preferred shares rose by 4.88% to R$0.86, São Martinho increased 5.82% to R$14.91, and Jalles Machado climbed 2.55% to R$2.81. Similarly, Adecoagro's shares in the New York market gained 5.56%, reaching US$8.35. The trade pact has introduced ethanol import quotas for the EU, including a tariff-free allocation of 570.3 million liters destined for the chemical industry and a quota for fuel and other uses benefiting from a one-third tariff reduction on up to 200,000 tons of ethanol.

Meanwhile, Mato Grosso do Sul's 2025 trade with the EU underscored favorable conditions with exports totaling 3.76 million tons worth $1.3 billion and imports at 77,000 tons amounting to $492 million, resulting in a $812 million trade surplus. The state's main exports included cellulose (1 million tons, $627 million), soybean meal (917,000 tons, $310 million), and beef (14,000 tons, $126 million). According to Jaime Verruck, Secretary of Semadesc, the EU ranks as Mato Grosso do Sul's second most important export market and the newly ratified trade agreement is expected to enhance competitiveness through tariff cuts. He also highlighted efforts to certify agricultural production standards and pointed to promising prospects in ethanol exports to support the EU’s decarbonization objectives.