How Brazil ethanol benefits from the US biofuel breakthrough

Biofuels are expected to remain in high demand for the next few years as a green alternative aiding in the energy transition. Brazil is likely to be one of the main winners of this trend, according to Itaú BBA’s first analysis of the global ethanol market.

The bank says this demand could boost ethanol exports from Brazil, other ‘green’ fuels, and grains used in biofuel production. It could also increase the international prices of grains.

Guilherme Bellotti, Agro Consultancy manager at the bank, said that the US industry has many incentives to increase its production in the sector, especially ethanol and biomass diesel. Ethanol is also used as an input for making aviation biokerosene, also known as Sustainable Aviation Fuel (SAF). This creates a new demand that could be met with Brazil’s help, according to the analyst.

“If 30% of the US SAF output projected for 2050 come from corn ethanol, the additional demand for corn in the country would be 150 million tonnes,” he estimated.

This is a huge jump, considering that the US consumption projection for 2030 is only 13 million tonnes. “I think this creates another demand driver for agricultural products,” he added.

Itaú BBA forecasts that US soy consumption redirected for biomass diesel production will increase by about 17.6 million tonnes between 2022 and 2027, reaching 45.3 million tonnes.

If this increase in soybean demand by the US industry does come to fruition, it will create a need for more land, at about 4.6 million hectares, to produce an extra 17.6 million tonnes of soybeans, according to the estimate.

Moreover, if the exportable surplus of soybeans decreases in the US due to the local biofuel industry demand, it could affect the international trade flow of products.

“This would also push up prices to stimulate biofuel supply from other materials,” said the bank’s specialists.

Industry sources believe that even if this change occurs gradually and steadily, Brazil will benefit from it as both an exporter of agricultural products and a supplier of biofuels to the US.

Soy: GloboRural

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