Inside Brazil’s Fastest-Growing Ethanol Market: Mato Grosso’s Billion-Liter Leap

Brazil's Mato Grosso state is poised for a significant surge in ethanol production, with projections indicating a 16% increase to 8.44 billion liters in the 2026/27 harvest. This expansion is primarily driven by the growth of corn ethanol and the establishment of new industrial plants within the state, according to a forecast by the Mato Grosso Bioenergy Industry Union (Bioind-MT) and the Mato Grosso Institute of Agricultural Economics (Imea).

The anticipated growth follows a robust 2025/26 season, which saw the state's ethanol output rise by 8.52% to 7.27 billion liters, while national production remained largely stable with a modest 0.22% increase. Mato Grosso currently holds the second position in Brazil's ethanol production ranking, trailing only São Paulo.

Corn ethanol is expected to be the main catalyst for the 2026/27 expansion, with production from the cereal projected to climb by 18.67% to 7.33 billion liters. Sugarcane ethanol, by contrast, is set for a more moderate increase of 1.42%, reaching 1.11 billion liters. Silvio Rangel, president of Bioind-MT and the Federation of Industries of Mato Grosso (Fiemt), highlighted the state's dominance in corn ethanol, noting that Mato Grosso accounts for 62% of national cereal ethanol production.

Wellington Andrade, executive director of Bioind-MT, attributed this growth to both the expanded capacity of existing facilities and the inauguration of new industrial units. He cited approved financing for ALD Bioenergia and RRP Energia, Inpasa's plant expansion, and new projects from 3tentos and Evermat as key drivers.

The Imea survey also forecasts an 18.52% increase in corn milling for ethanol production, rising from 13.81 million tonnes in 2025/26 to 16.36 million tonnes in 2026/27. By-products of corn ethanol are also expected to see double-digit growth, with DDG and DDGS production increasing by 16.14% to 3.41 million tonnes, and corn oil by 12.9% to 338,900 tonnes. In the sugarcane sector, milling is projected to remain stable at 18.61 million tonnes, while sugar production is expected to decline by 1.42% to 579,700 tonnes.

Long-term projections from Imea suggest continued bioenergy expansion in Mato Grosso, with the state potentially reaching 15.02 billion liters of ethanol production by the 2033/34 harvest, more than double the 2025/26 estimate.

In related developments, Bosch is piloting a technology that combines diesel and ethanol in sugarcane harvester engines. This retrofit system aims to replace up to 60% of fossil fuel use without compromising engine power. The solution, initially developed for large mining trucks, is currently being tested in six sugarcane mills across Brazil. Matheus Pintor, commercial head of Bosch's dual-fuel division, emphasized the economic rationale behind the retrofit, stating that it accelerates decarbonization by utilizing existing machinery rather than waiting for fleet replacement, which can take years.

Meanwhile, Atvos, a Brazilian clean energy company, is advancing its second corn ethanol project in Mato Grosso do Sul. The company has committed to paying R$3.284 million in environmental compensation for a new industrial unit in Costa Rica, with an estimated investment of R$669 million and a production capacity of 150 million to 800 million liters. This new unit will be integrated into Atvos' existing sugarcane ethanol plant in the municipality. The company also announced a similar project near the Santa Luzia plant in Nova Alvorada do Sul, with an investment exceeding R$1 billion, aiming to integrate sugarcane and corn operations and use sugarcane bagasse for energy generation.

Mato Grosso do Sul's corn ethanol industrial park currently operates with three units (two from Inpasa and one from Neomille) and is set for further expansion. Planned projects include an expansion of Inpasa's Sidrolândia plant by 300 million liters and a new plant in Jaraguari with an estimated capacity of 200 million liters per year. The state, a national leader in DDG production, saw approximately 1.40 million tonnes produced last year, with 1.15 million tonnes exported to countries like New Zealand, Turkey, Vietnam, and Spain.

Brazil's Biofuel Ascendancy: Embraer's (EMBR3) Ethanol Aircraft Goes Global as Corn Drives Domestic Energy Shift

A strategic move to internationalize the Ipanema crop duster, coupled with a structural boom in corn-based ethanol production, solidifies Brazil's leadership in sustainable energy.

Brazil is reinforcing its status as a global bioenergy powerhouse through a dual strategy of technological export and domestic production innovation. On one front, aerospace giant Embraer is taking its first concrete steps to internationalize its successful ethanol-powered agricultural aircraft, the Ipanema. Simultaneously, the nation's bioenergy matrix is undergoing a structural transformation, with corn-based ethanol production surging to historic levels, attracting significant investment, and bolstering national energy security.

Embraer's Biofuel Ambition Takes Flight

The internationalization effort centers on the Ipanema, a crop duster that has been exclusively powered by biofuel since 2015. Embraer recently signed a memorandum of understanding with Essential Energy Holding, an Argentine ethanol producer, to explore market opportunities in Argentina's key agricultural regions, such as northern Santa Fe province. This partnership is a crucial step in overcoming the primary barrier to the Ipanema's foreign expansion: the lack of a widely distributed and abundant ethanol supply outside Brazil.

Embraer's director of agricultural aviation business and production, Sany Onofre, noted that the lack of fuel availability had previously made expansion into Latin America "a difficulty, or even an impossibility." To address this, the company has engaged with industrial associations and potential partners across the region, including in Paraguay, Uruguay, and Mexico, finding them "extremely enthusiastic."

Initially conceived to offer farmers a cost-effective alternative, ethanol being cheaper than gasoline, the Ipanema has increasingly gained a strong environmental appeal due to its lower carbon footprint. Essential Energy CEO Federico Pucciariello noted that the collaboration aims to "improve the economic equation for Argentine producers by facilitating access to cutting-edge technology and locally produced ethanol, which translates into lower operating costs and higher productivity in the field."

The market potential is significant. While Embraer's agricultural aviation unit currently generates around US$60 million annually, the company estimates that the opening of Latin American markets could boost the segment's revenue by 20% to 30%. The groundwork is already being laid, with a recent Ipanema sale to a rural producer in Paraguay, which quickly led to nationwide operational approval for the aircraft. In Argentina, Embraer is currently awaiting regulatory clearance for operational authorization.

Competing Landscape

Despite the growing presence of agricultural drones, Embraer does not yet view them as direct competitors. "They are smaller-capacity products designed for specific tasks," Onofre explained. An Ipanema carries up to 700 kilograms per flight, whereas the largest spraying drones currently carry around 50 kilograms. However, the company remains vigilant, acknowledging that "larger drones and unmanned aerial vehicles [are] under development, and we will encounter them along the way."

The Corn Ethanol Revolution

The second major development underscoring Brazil's bioenergy leadership is the structural shift in its domestic ethanol production. Corn-based ethanol has surged, gaining a central role in the country’s biofuels matrix and attracting new investments.

In a historic milestone, corn ethanol accounted for 77.2% of total ethanol production during the second half of December 2025, according to data from the Brazilian Sugarcane and Bioenergy Industry Association (Unica). This figure reflects the strong momentum of the 2025/26 harvest and sustained investment flows into the sector.

The rapid growth of corn ethanol marks a significant change in an industry historically dominated by sugarcane. Corn-based production offers a key advantage: operational predictability, allowing plants to operate year-round and reducing dependence on agricultural seasonality.

During the 2025/26 harvest, corn ethanol production reached 6.86 billion liters, representing a 13.98% increase compared to the same period of the previous season. This expansion is supported by technological advances, improved energy efficiency, and the integration of valuable co-products.

Strengthening Energy Security and Regional Development

The expansion of corn ethanol reinforces the strategic role of bioenergy in Brazil’s energy matrix. By increasing the supply of renewable fuels, the country reduces its exposure to international oil price volatility and geopolitical risks. This diversification aligns Brazil with global climate goals and decarbonization commitments.

The growth trajectory is closely linked to rising investments in new plants and capacity expansions. The continuous production throughout the year reduces financial risk, making the sector increasingly attractive to private capital. Furthermore, the integration of ethanol production with power generation and co-products, such as DDG (distillers dried grains) used in animal nutrition, enhances project profitability and strengthens synergies across the agriculture, livestock, and energy sectors.

Beyond the energy industry, this expansion generates jobs, stimulates local economies, and strengthens agribusiness value chains, with municipalities hosting ethanol plants benefiting from increased tax revenues and broader economic activity.

The simultaneous push by Embraer to export its ethanol-powered technology and the domestic surge of corn ethanol production illustrate a mature and dynamic Brazilian bioenergy sector. By combining technological innovation with a structural shift in production, Brazil is not only securing its own energy future but also positioning itself as a global leader in the transition to sustainable, low-carbon energy sources. The next phase for the industry will involve successfully replicating the ethanol infrastructure abroad while continuing to maximize the efficiency and economic benefits of its diversified domestic production.

The Global Biofuel Shift: How Brazil’s Ethanol Strategy Navigates the China-US Rivalry

The global energy landscape is undergoing a structural transformation, and at the heart of this shift lies Brazil. As the world’s leading producer of sugarcane ethanol and a rapidly growing player in corn-based biofuels, Brazil finds itself in a strategic sweet spot between two superpowers: China and the United States. While the U.S. has long been a traditional partner, China’s recent pivot toward Brazilian ethanol as a cornerstone of its green transition is redefining trade dynamics and sending ripples through global commodity markets.

China’s interest in Brazilian ethanol is driven by a pragmatic necessity to meet ambitious carbon reduction targets. With a goal to integrate sustainable aviation fuel (SAF) into its massive aviation sector, which consumes over 80 million tons of fuel annually, Beijing has identified Brazil’s ethanol as a superior alternative to its current reliance on recycled cooking oil. This move is not just about environmental goals; it is a strategic play for self-sufficiency and unity among Global South nations, especially as trade tensions with the U.S. escalate over tariffs and protectionist policies.

The rise of corn ethanol in Brazil is a game-changer that brings both opportunities and complex market challenges. Historically, Brazil’s ethanol production was dominated by sugarcane, but corn-based production is projected to reach nearly 10 billion liters in the current cycle, with capacity potentially doubling by the early 2030s. This expansion is creating a "structural shift" in the domestic market, as corn ethanol begins to compete directly with sugarcane for market share. This competition is likely to depress ethanol prices at the pump, benefiting consumers but squeezing the profit margins of traditional sugarcane mills.

Corn Ethanol Expansion Strengthens Brazil’s Livestock Industry Through DDG Supply

This rapid growth in the 100% corn-based ethanol sector has had a significant and positive impact on Brazil’s livestock industry, particularly in Mato Grosso, home to the country’s largest beef cattle herd. Cattle ranchers in the state view this expansion favorably, mainly due to the increased availability of dried distillers grains (DDG).

DDG is a valuable co-product of ethanol production, obtained from the fermentation of corn starch. With a low moisture content of approximately 10% to 12%, it is easy to store and has become a key component of animal nutrition. Modern livestock farming is built on four main pillars, genetics, nutrition, management, and animal health, with nutrition playing a central role in economic efficiency and profitability.

DDG is especially valued for its crude protein content, which typically ranges from 25% to 32%. This makes it a competitive substitute for soybean meal, which generally contains around 43% crude protein, offering a more cost-effective option and helping to reduce feed costs for producers. The use of DDG in cattle nutrition is well established in the United States, and as Brazil’s corn ethanol industry expands, the product is increasingly reaching international markets.

In 2025 alone, ethanol producers in Mato Grosso exported approximately 73,000 metric tons of DDG, generating revenues of $22.4 million, according to a survey by the Federation of Industries of Mato Grosso (FIEMT).

Beyond the fuel pumps

The repercussions of this corn ethanol boom also extend to the global food and sugar markets. As more corn is diverted to ethanol production, the competition between domestic consumption and exports is intensifying. This trend, coupled with falling corn stocks in China and a potential resumption of large-scale Chinese imports, could drive corn prices significantly higher, echoing the peaks seen in previous harvest cycles. Furthermore, as Brazilian mills face increased competition from corn ethanol, they may pivot back toward sugar production, potentially flooding the global sugar market and impacting international prices at a time when they are already under pressure.

The geopolitical implications are equally significant. The strengthening Brazil-China relationship, characterized by high-level diplomatic engagements and discussions on financing through the BRICS framework, signals a move toward greater economic integration that bypasses traditional Western-centric financial structures. For Brazil, this means balancing its "best moment" in relations with China, its largest trading partner for soy, iron ore, and meat, with the volatile trade environment shaped by U.S. policy.

Ultimately, Brazil’s role in the global energy transition is no longer just about being a supplier of raw materials. It is about navigating a complex web of industrial competition, food security, and superpower rivalry. As the world watches the development of sustainable aviation (SAF) and maritime fuels, Brazil’s ability to manage the delicate balance between corn and sugarcane, and between Beijing and Washington, will determine its standing as a sovereign leader in the new green economy.