Porto Alegre, March 18, 2026 – The most recent estimate by SAFRAS & Mercado for accumulated stocks of anhydrous and hydrous ethanol in the Center-South points to volumes of 1.21 billion liters of anhydrous and 1.53 billion liters of hydrous through the end of the first half of March. These data were obtained through consultations with a sample of mills in the region and estimates regarding the average fortnightly consumption pattern in this first quarter for the remaining producing units.
In the case of hydrous ethanol, the accumulated volume of 1.53 billion liters is 17% lower than the 1.85 billion liters accumulated in the immediately previous fortnight, the second half of February, and 23% lower than the 2.00 billion liters accumulated in the first half of March of the previous year. Compared to the five-year average for the same period, which stands at 1.87 billion liters, there is a gap of 18%.
The same pattern can be observed for anhydrous ethanol, which, with an accumulated volume of 1.21 billion liters at the end of the first half of March, tends to be 16% lower than the volumes accumulated in the immediately previous fortnight, the second half of February, which stood at 1.44 billion liters. In addition, in the year-on-year comparison, volumes show a decline of 19% compared to the 1.50 billion liters accumulated at the end of the first half of March last year. Compared to the five-year average for the same period, which stands at 1.31 billion liters, there is a gap of 7%.
SAFRAS & Mercado highlights that the stock consumption pattern has remained firm throughout the first quarter of 2026 due to discounts that mills have been offering to move remaining inventory volumes at the end of the current inter-harvest period before the new 2027/28 season begins in April. This phenomenon, which occurs at the end of every inter-harvest period, is called “tank pressure” and reflects the need for mills to move ethanol from the old crop to store ethanol from the new crop.
On the other hand, distributors, aware of the consolidation of this movement, are more comfortable entering the short-term market, staggering their purchases from mills as much as possible. However, the outbreak of war in Iran at the beginning of March and the strong lag in domestic gasoline and diesel prices led many distributors to anticipate purchases ahead of a potential upward correction in gasoline prices. This has not yet been ruled out by the market, although Petrobras has only increased diesel after the PIS/COFINS tax cut on it.
Another factor that further complicates this issue is the pattern of early crop start by several mills. Since January, SAFRAS & Mercado has been publishing in its daily report a schedule pattern for the start of crushing by Center-South mills, showing that dozens of them did not wait until early April to begin sugarcane crushing in the region. SAFRAS & Mercado expected that already in the second half of February around 12 mills would start crushing early. Now in March, our survey indicates 25 mills in the first half and another 38 mills in the second half of the same month.
With this, we highlight that even before the new 2026/27 crop begins, the Center-South already counts with 75 mills operating crushing activities early, within a total of 265 units expected to operate this season. Thus, 28% of the mills scheduled to operate in the Center-South began activities early, before April. The result is an increase in ethanol supply from the new crop and, consequently, greater tank pressure to move product from the old 2025/26 crop.
Another important point supporting this scenario is the production mix pattern for the first fortnights of each crop, which historically ranges from 100% to 70% toward ethanol. The few mills that produce sugar, when they do so, operate with at most a 30% production mix for the commodity during the first three fortnights of operation. As a result, ethanol oversupply remains elevated at the start of each crop, in addition to the tank pressure that occurs at the end of every season.
Regarding MAPA data, the market observes that officially known stock volumes only cover the end of the first half of February in the Center-South, standing at 1.72 billion liters for anhydrous and 2.23 billion liters for hydrous ethanol. In this sense, anhydrous shows a decline of 17% compared to the immediately previous fortnight, while hydrous also shows a 17% drop. In the year-on-year comparison, MAPA data show a decline of 26% in anhydrous volumes and 28% in hydrous volumes in the Center-South. Compared to the five-year average, there is a decline of 17% for anhydrous and 22% for hydrous, maintaining a scenario of clear weakness in 2025/26 crop volumes both relative to the previous crop and to the five-year historical average.
SAFRAS & Mercado highlights that in the new 2026/27 crop, stock volumes of both anhydrous and hydrous ethanol should be very high due to record production for the season. The response to sugar prices below production cost, combined with arbitration premiums between New York raw sugar and hydrous ethanol in the physical market with advantages above 30% for hydrous ethanol, should maintain record production levels for both biofuels in the new season, with excess volumes accumulating in stocks throughout the year. In the previous 2025/26 crop, anhydrous ethanol volumes showed an average gap of 24% compared to the previous 2024/25 crop. For the new 2026/27 season, SAFRAS & Mercado estimates volumes 30% above those of the 2025/26 crop.
The same applies to hydrous ethanol in the Center-South, which in the previous 2025/26 crop averaged 28% below volumes of the 2024/25 season. For the new 2026/27 season, SAFRAS & Mercado estimates volumes 35% higher than those of the 2025/26 season. The maximum volume of anhydrous ethanol stored in the 2025/26 crop was 3.50 billion liters, while hydrous ethanol reached 4.99 billion liters. Therefore, for the new 2026/27 season, maximum stored volumes of anhydrous ethanol are expected to reach 4.55 billion liters and hydrous ethanol 6.48 billion liters.
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