Market participants expect Brazil's domestic corn demand to continue growing in 2026 because of expanding corn ethanol production and ample national supply, while the export market remains sidelined.
Domestic demand should increase by nearly 4.1mn metric tonnes (t), reaching an all-time high of 94.6mn t in the 2025-26 season, according to national supply company Conab.
Corn ethanol will likely account for the greatest share of this hike. Market participants forecast that Brazil will produce a record of approximately 12bn l (207,120 b/d) of the grain-based biofuel in its 2026-27 cycle, which runs from April 2026 to March 2027. That is when corn produced by the 2025-26 crop will be crushed.
The national biofuels industry is set to receive around 30mn t of corn, based on an estimate that 1t of corn can produce around 400l of ethanol. Demand from corn ethanol units is poised to grow by 5mn t, considering nearly 10bn l expected to be obtained in the 2025-26 cycle, according to estimates from the corn ethanol association Unem. That surpasses Conab's 4mn t growth forecast.
Brazil has 24 corn ethanol units operating nationwide, most of them in central-western states. Mato Grosso — Brazil's largest corn producer — is expected to crush 13.5mn t for corn ethanol production in the 2025-26 crop, data from Unem show. That accounts for 26pc of the state's output, based on a 51.7mn t projection from the state's institute of agricultural economics Imea. Data from Imea and Unem show that corn ethanol's share of demand rose from 22.5pc — or 12.5mn t of corn — in the 2024-25 season, when Mato Grosso produced a record of 55.4mn tof corn.
Corn ethanol production has grown substantially in Brazil over the past five years because it is a renewable source of energy and contributes to the decarbonization of the Brazilian fuel matrix. Market participants also cite its valuable by-products — corn oil, dried distiller grains (DDG) and distiller's dried grains with solubles (DDGS) — and bumper national corn production as other factors that support large investments in the biofuel.
Brazil is poised to produce 138.9mn t of corn in the 2025-26 season, including the first, second and third crops, according to Conab. That is the second-highest volume of the grain ever in Brazil's historical series, only 1.5pc behind the record from the 2024-25 cycle. Excellent weather conditions supported gains in the previous season. The second corn crop accounts for most of the harvest each season. The 2025-26 second corn crop is on track to reach 110.5mn t, also ranking second in the historical series.
The second corn crop also accounts for most of the grain geared to ethanol units, and it heavily supplies the export market, which was sidelined by competition with the national industry since the 2023-24 season. Domestic buyers have reportedly paid prices above bids from importers, which kept importers at bay from Brazilian shipments in 2025. Sales to the export market also dwindled at the time.
Despite raising corn production by over 26mn t in the 2024-25 season, Brazilian exports rose by just 1.5mn t from the prior crop. Conab projects shipments in February 2025-January 2026 at 40mn t, down from the 2021-22 and 2022-23 seasons by 6.6mn and 14.6mn t, respectively. Both cycles accounted for record high production at the time.
Conab forecasts exports to recover their share in the 2025-26 season by reaching 46.5mn t, accounting for 33.5pc of the total produced. Exports accounted for 28.4pc of 2024-25 output, down from 33.3pc in the prior cycle. Carryover stocks into 2025-26 of 14.1mn t should support this recovery, surpassing the 1.9mn t a year earlier. Yet exports continue to account for less than the 41pc registered on average from the record crops of 2021-22 and 2022-23.
Brazil increased corn exports from 2020 to 2023, a trend that has since reversed due to an expanding domestic market.It had managed to surpass the US in volumes shipped in the 2022-23 season, but Brazilian exports then returned to second place due to lower production and growing demand from domestic corn ethanol output.
Exports should remain sidelined for the Brazilian corn market because international buyers are shifting to other origins rather than raising bids to compete with domestic industries, according to market participants. Yet some countries continue to prioritize Brazil's product, such as Iran and Egypt, because of sanctions from other corn producers and lower logistical costs, respectively.
Brazil continues to expand DDG/DDGS market
Unem expects Brazil to produce 4.8mn t of DDG and DDGS in the 2025-26 season, up from 4.1mn t in 2024-25, on higher corn ethanol production. Mato Grosso state should account for 2.9mn t of DDGs — which includes both those with solubles and without solubles — in the 2025-26 cycle, an increase from the 2.7mn t in the 2024-25 season.
DDG is the main byproduct of corn ethanol production. It is a protein-rich commodity used to replace corn, cottonseed, soybean meal and other feed ingredients in the animal protein sector.
Although most of Brazil's DDG production is destined for the domestic market, Brazil has been expanding its exports. Shipments totaled 714,900t in January-October, according to the association of cereal exporters Anec. The recent opening of the Chinese market creates export prospects for the 2026-27 crop season. Until 2025, China imported all of its DDGs from the US.
Currently, Brazil has DDGs business with 18 markets. The main one is Vietnam, with 639,045t exported from 2023-2025, according to Unem reports. It was followed by Turkey, which received 403,125t in the period, New Zealand, with 311,635t, and Spain, with 246,600t.
