Brazil’s corn market is undergoing a structural shift as rapidly expanding ethanol production absorbs a growing share of supply, reducing the role exports play in setting domestic prices, according to Gustavo Trevizoli, origination director at Cofco International, one of the world’s largest agricultural commodity traders.
The change marks a reversal for a market historically geared toward exports. Corn ethanol plants are now becoming the main price setters in regions where they compete directly for grain, Trevizoli said at The New Agro, an event hosted by Grão Direto in São Paulo on Tuesday.
“Corn crushing capacity was built over the past 10 years, while soybean crushing capacity took 50,” Trevizoli said. “That is creating a new dynamic: exports no longer set corn prices. Especially in regions around the plants, prices are being set by the ethanol and DDG industry.”
DDGs, or distillers dried grains, are a protein-rich feed ingredient produced as a byproduct of corn ethanol manufacturing.
The expansion of corn ethanol has also encouraged farmers to plant more safrinha corn, the second crop planted on the same land after the soybean harvest. The second crop now accounts for almost 80% of Brazil’s total corn production, according to Conab, Brazil’s food supply agency.
As a result, exports are increasingly becoming a secondary outlet rather than the market’s main demand driver, Trevizoli said.
“Corn is being exported today more because companies need to keep logistics assets operating,” he said. Soybean volumes decline sharply in the third and fourth quarters because of seasonality, making corn necessary to keep those assets utilized. “It has more to do with that than with favorable economic fundamentals.”
Trevizoli said the shift is positive for Brazil and for farmers and is likely to play an increasingly important role in determining margins throughout the corn supply chain.
Risks to the Model
The success of a corn production model increasingly geared toward domestic consumption, however, will depend on continued growth in the corn ethanol industry.
Clayton Melo, a commodities, energy and data-business specialist who moderated the panel, warned that biofuel blending requirements may not increase quickly enough to absorb the additional ethanol supply coming to market.
“I am extremely concerned about the amount of ethanol entering the market,” Melo said. “I am not convinced we will reach that level of demand, and at some point this expansion will have to slow.”
Even with projects aimed at increasing ethanol use in shipping and sustainable aviation fuel, or SAF, supply could exceed demand in the near term, he said. That could be particularly negative for sugarcane producers, whose margins are higher and could face additional pressure if sugar prices remain weak.
Panelists also highlighted two broader risks to the new market structure: a slowdown in China and possible delays in Brazil in raising mandatory ethanol blending levels in gasoline.
Fernando Berardo, head of commodities at market-data company Barchart, pointed to weaker Chinese demand as another concern. China remains a major buyer of Brazilian corn, though its share of Brazil’s exports has declined in recent years.
“The forecast for Chinese GDP is growth of 3.6% in 2027, compared with 4.7% this year,” Berardo said. “One percentage point less is significant. Global GDP growth is also expected to be lower. That means less demand.”
Berardo also said projected 2026 corn ending stocks have tightened, with uncertain implications for prices.
“Chicago closed above $5 a bushel again today, which is a price at which US farmers like to sell,” he said. “We have to see where prices go from here.”
This story was translated from the original Portuguese with the assistance of artificial intelligence and reviewed by The AgriBiz editorial staff.
