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January 13, 2020

Corn to Account for 4.7% of Brazil's Ethanol Production in 2019/20

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

One of the biggest shifts in Brazilian agriculture in recent years has been the explosive growth of corn being used for ethanol production. The first corn-based ethanol facility in Brazil opened its doors in July of 2017 and since then, numerous other facilities have been built, others are currently being constructed and more are in the planning phase.

During the 2019/20 harvest season, Brazil is expected to produce 35.5 billion liters of ethanol, which represents a 7.2% increase compared to last year. Approximately 33.5 billion liters will come from sugarcane, which represents an increase of 4.6%. Approximately 1.69 billion liters will come from corn, which is an increase of 114%. During the 2019/20 harvest season, 4.7% of Brazil's ethanol production will come from corn. During the 2018/19 harvest season, 2.97% of Brazil's ethanol came from corn.

Investments in new corn-based ethanol facilities are being announced on a regular basis in Brazil. In 2020, approximately 5 million tons of Brazilian corn will be used for ethanol production and that is expected to increase to at least 10 million tons as soon as the facilities that are being built or planning to be built, come online. Most of the corn-based ethanol facilities will be located in the center-west region of Brazil where there is an excess of corn production.

There are approximately 340-350 sugar mills in Brazil that utilize sugarcane to make ethanol and sugar, but only a dozen or two that utilize corn, but the difference is the number of mills using sugarcane is declining while the number of mills using corn is increasing.

This of course, is good news for corn producers in the region, but it is not good news for livestock producers in southern Brazil that depend on corn imported from the center-west region of Brazil for their livestock operations. Additionally, the increased use of corn to make ethanol could eventually start to limit the amount of Brazil's corn exports, which increased tremendously in 2019.

In Conab's third evaluation of Brazil's 2019/20 sugarcane crop, they estimated that the sugarcane yields increased 5% compared to last year while the sugarcane acreage declined 1.3% to 8.5 million hectares. Conab estimates that 65% of Brazil's sugarcane will be used for ethanol production and 35% for sugar production. The 35% used for sugar will result in 30.1 million tons of sugar production.