Brazil ethanol imports may accelerate in the next three months, reflecting favorable arbitrage for foreign product and a need to boost supply during a period of high prices and tight domestic inventories.
Market participants estimate ethanol imports of 230mn-250mn liters (l) (12,000-13,100 b/d) in the four months through March 2026, the off-season for sugarcane in Brazil's top producing central-south region. That would mark the largest volume imported for the four-month period since the 2020-21 crop, when it totaled 274.7mn l, according to data from Brazilian trade ministry Mdic.
Ethanol imports totaled almost 243.4mn l between April and November 2025, according to official data.
Argentina and Paraguay are expected to be the main suppliers of the product in the coming months. Under the Mercosur agreement, imports from these countries are exempt from an 18pc import levy, which are applied on volumes from the US.
The shipments would meet part of domestic demand, which is coming up against smaller inventory levels than in years past.
On 30 November, available stocks of hydrous ethanol totaled 4.9bn l, according to data from the agriculture and livestock ministry Mapa. This is 26pc less than in the same period in 2024. Anhydrous ethanol stocks totaled 3.5bn l, 15pc lower than the previous year.
Lower stocks are partly due to a sugarcane crop whose development and quality were negatively affected by drought and fires in 2024. The result was lower sugarcane crushing and ethanol production in 2025-26 than in the previous crop.
The central-south region produced 29.5bn l of ethanol between the start of the crop in April and 1 December, 5pc lower than the same period in 2024, according to the latest data from the sugarcane and bioenergy industry association Unica.
The current cycle had already begun with lower carryover stocks, thanks to strong ethanol consumption through 2024-25. Supply concerns grew with this year's 1 August increase in the percentage of anhydrous blended with gasoline at the retail stage, which grew to 30pc (E30) from 27pc (E27).
Throughout the second half of 2025, producers signaled their reluctance to exercise flexibility clauses in anhydrous contracts — which usually allow for an increase of up to 30pc in the volume purchased during the crop-year.
Additionally, weather conditions remain a source of concern heading into the new year. A rainy March and April next year could delay the start of the 2026-27 harvest, making supply even tighter.
A calming supply mix adjustment
A successful shift in the output mix towards ethanol this quarter —and towards anhydrous in particular in the last few weeks — have helped ease supply concerns.
The current crop started with expectations that recent investments in crystallization capacity would lift the share of feedstock directed to sugar production to 52pc. But by mid-year sugar was proving less profitable than ethanol, making producers review their strategy and maximize alcohol production.
The central-south mix stood at 64.48pc ethanol and 35.52pc sugar in the second half of November, according to Unica. This compares with 55.36pc ethanol and 44.64pc sugar in the same period in 2024.
Anhydrous production was also boosted following the E30 announcement. Some corn ethanol mills shifted 100pc of their production to anhydrous ethanol. In the central-south, anhydrous ethanol production totaled 457mn l in the second half of November, up by 10pc from a year earlier, according to Unica.
This relief caused the market to adjust its import estimates to more conservative figures.
The outlook of approximately 500mn l of ethanol imports in 2025-26, considering the volume realized plus the estimate of 230mn-250mn l, is closer to the lower end of July's forecasts, when participants penciled in imports of 400mn-800mn l in the cycle.
