Brazilian ethanol exports to Europe remained limited throughout 2024, yet traders on both sides of the Atlantic anticipate a possible increase in the coming months. The main driver lies in a potential open arbitrage window in the middle quarters of 2025.
Brazil shipped a modest 1.90 billion liters of ethanol in 2024, a drop of 25% compared with 2.52 billion liters the previous year. Within this total, the Amsterdam-Rotterdam-Antwerp (ARA) hub ranked third among the top five destinations, receiving just 152 million liters—or 7.9%—compared with 586 million liters (23%) in 2023.
Low Prices and Steady Biofuel Demand in the EU
Expectations of lower prices in the second and third quarters of the year, combined with sustained biofuel demand in European countries that mandate ethanol usage, may pave the way for larger ethanol flows from Brazil to the bloc. This outlook primarily stems from more optimistic forecasts for the 2025–26 sugarcane harvest in Center-South Brazil—starting in April—and the subsequent rise in ethanol supply.
Analysts who once projected cane processing at around 580 million metric tons have revised their estimates to 600–620 million tons, contingent on favorable weather. A Brazilian exporter noted that if price differentials align, it might be feasible to ship anhydrous ethanol to Europe between July and September at competitive levels.
Price Factors and Currency Volatility
The Ethanol T2 FOB ARA price has rebounded compared with the same period last year. According to Platts, on January 23, T2 ethanol stood at Eur 682.25/cu m, up approximately 15%. The depreciation of the Brazilian Real, coupled with T2 FOB ARA in contango and Brazil in backwardation, has widened the gap, creating an opportunity for arbitrage if T2 prices climb further.
Another trader highlighted that Brazilian ethanol prices remain well-supported, keeping the US more competitive. Still, favorable crop conditions could boost Brazilian exports to Europe. Meanwhile, the Euro’s weakening against the US dollar is also influencing the appeal of imports into ARA from the US. Even so, Brazil has the advantage of higher greenhouse gas (GHG) savings and the ability to load larger vessels, making its ethanol attractive to European buyers.
The Impact of RED III
The deadline for implementing the Renewable Energy Directive III (RED III) measures is May this year, although delays are expected. Under RED III, member states can either reduce the GHG intensity of transport fuels by 14.5% by 2030 or ensure that at least 29% of the energy consumed in the transport sector is renewable by 2030.
The US Angle and Corn Prices
Higher ethanol prices in the US, driven by stronger corn markets, may further enhance Brazil’s export opportunities in the short term. On January 10, the US Department of Agriculture (USDA) released bullish monthly data for the 2024–25 corn market, prompting more speculative long positions. USDA slashed projected ending stocks by 12.65% and cut output by 1.82%, fueling a rise in CBOT corn futures—and consequently pushing Chicago ethanol prices to their highest level since September 2024, according to Platts assessments.
A US-based trader expects Brazil to be more active in global exports in 2025 due to a weaker Real and competitive pricing. Meanwhile, fresh US export bookings for Q2 and beyond could be lower as a result of tighter corn inventories and potential tariffs—particularly on Canada.
The main concern is whether newly elected President Donald Trump will impose hefty tariffs on Canada, currently the biggest importer of US ethanol. If that scenario unfolds, US producers might target the EU to compensate for lost volumes, possibly affecting price dynamics.
Forecasts for Brazil’s 2025 Exports
Industry projections for Brazil’s 2025 ethanol exports vary considerably, mainly due to uncertainty over upcoming production levels. Sources surveyed by Commodity Insights foresee total exports between 1.90 and 2.2 billion liters.
If more optimistic projections materialize, shipments of Grade B hydrous ethanol—industrial-grade product used in sectors like pharmaceuticals and cosmetics—to South Korea could account for most of the export increase, potentially matching or exceeding 2024 levels. Alongside a likely rise in flows to Europe, additional volumes could head to secondary markets such as Nigeria and India.
Opinions also differ regarding Brazil’s domestic market, particularly with respect to growing E100 consumption at the pump, the higher blend of anhydrous ethanol in gasoline, and the pricing strategy of state-owned Petrobras. In the longer term, the recently announced agreement between the EU and four Mercosur members (Argentina, Brazil, Paraguay, and Uruguay) in December may bolster ARA’s role as a key long-haul hub for Brazilian ethanol, potentially rivaling the US and South Korea.