Insight Focus
Corn ethanol production will reach 30% of total ethanol production in Brazil in the 26/27 crop. The large supply of corn in Brazil provides great competitiveness for corn ethanol mills. The expansion is fuelled by the growth of corn mills and booming second-crop corn production in the Central-West.
Corn Ethanol is Gaining Traction in Brazil
We expect corn ethanol production to represent 30% of total ethanol output in Centre-South (CS) Brazil in the 2026/27 season. This represents a total production of 10.6 billion litres, reflecting 14% year-on-year growth and a 65% share of hydrous ethanol.
The significant growth is mainly driven by the expansion of ethanol mills in Brazil’s Central-West region, along with rising corn production in these same regions.
The increase in corn ethanol production is due to its cost competitiveness and the large supply of corn, as Brazil is the world’s third-largest producer of the grain, according to the USDA.
For ethanol production, mills primarily use second-crop corn — a secondary crop cultivated immediately after the main season — which represented 80% of total grain output in Brazil during the 2024/25 crop year.
Source: CONAB
Ethanol mills benefit from a wide supply of the grain without having to compete with food production, which is usually concentrated in the first crop. One tonne of corn produces between 420 and 460 litres of ethanol.
Additionally, to produce corn ethanol, mills do not need to produce the corn themselves, making operations less costly and less capital-intensive compared to sugarcane mills.
Lower Production Costs Favour Corn Ethanol
The large supply of corn in Brazil provides strong cost competitiveness for corn ethanol mills, with an average production cost of BRL 1.85/litre, compared to BRL 2.45/litre for sugarcane mills.
Corn ethanol also generates two valuable byproducts — DDG (Dried Distillers Grains) and vegetable oil — which create additional revenue streams and help offset production costs. DDG, a protein-rich feed, is marketed for animal feed, making intensive cattle production cheaper in Brazil. One tonne of corn yields between 260–300kg of DDG and 15–20kg of vegetable oil.
[1] Cost of producing corn ethanol, considering the revenue from DDG and vegetable oil.
[2] Cost of producing corn ethanol without the revenue from byproducts.
Without the revenue from byproducts, corn ethanol mills would need higher productivity levels to compete with sugarcane ethanol.
But corn ethanol mills are highly dependent on biomass — commonly wood chips — to generate steam for production. The availability of this input is becoming a concern for the sector as corn ethanol capacity continues to grow.
Some mills have begun experimenting with other biomass sources, such as animal waste, to reduce dependence on wood chips, but report that efficiency remains insufficient. Although profit margins are still better, early warning signs are emerging across the industry.
Central-West Leads Corn Ethanol Production in Brazil
Much of corn ethanol’s competitiveness is tied to its location. Of the 22 operating mills, 20 are located in the border states of the Centre-South — Mato Grosso, Goiás, and Mato Grosso do Sul — all in Brazil’s Central-West. These states together account for 60% of total Brazilian second-crop corn production.
Another 31 projects were announced between late 2024 and 2025, with potential to add 10 billion litres of corn ethanol to the Brazilian market.
There are two main types of ethanol mills operating in Brazil:
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Standalone mills, which produce ethanol exclusively from corn; and
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Flex-fuel mills, which use both corn and sugarcane.
Of the operating mills, 13 are stand-alone and 9 are flex-fuel.
While the cane ethanol crop is between April and November of the year, corn ethanol mills produce year-round. Those that produce exclusively from corn purchase and store ethanol according to their operational plan.
