Porto Alegre, May 21, 2026 – SAFRAS & Mercado estimates accumulated volumes of 826 million liters of anhydrous ethanol and 1.42 billion liters of hydrous ethanol available for commercialization through the end of the first half of May in the Center-South; anhydrous stocks increased 18% from the previous period, while hydrous stocks advanced 22%; strong production growth enabled stock-building movements across the region.
SAFRAS & Mercado conducted an estimate of the physical volumes available for commercialization of anhydrous and hydrous ethanol stocks in Brazil’s Center-South, accumulated through the end of the first half of May. These figures were obtained through a survey with a broad sample of mills in the region and represent an advance over the stock measurements currently addressed by the ANP, which so far only cover the first half of April, a period when the new 2026/27 Center-South crop was still in its initial milling stages, even though harvesting had started early in March.
Basically, the context is that the strong advance of the sugarcane crop in the region and the high concentration of cane allocated to ethanol production expected for the season are placing mills in a strong need to begin stock-building. Mills are also expecting a recovery in anhydrous and hydrous ethanol prices beginning in July, when the new 2026/27 Center-South crop moves beyond its production peak. Historically, the sugarcane crushing and byproducts production curve maintains a positive slope until the second half of July or, at most, the first half of August.
Until then, supply continues to increase and prices remain under constant downward pressure. In this context, facing the current phase of sharp ethanol price declines, mills are beginning early stock formation to sell during the second half of the crop cycle, when the supply curve enters a negative slope and prices move in the opposite direction, with an upward trend. In addition, the very increase in stocks and the withdrawal of ethanol supply from the short-term physical market help support prices, with recent declines already showing some level of deceleration.
On the other hand, SAFRAS & Mercado observes that distributors have also been operating hand-to-mouth in the market regarding demand from mills. Therefore, the slowdown in sales naturally leads mills to shift toward stock-building for the second half of the crop cycle amid the distributors’ spot-buying strategy, which, in SAFRAS & Mercado’s view, is ultimately aimed only at pushing ethanol prices even lower. Another interesting aspect in the short-term market is the expansion of corn ethanol supply, which continues to push the production curve upward, generating additional upward pressure on stock levels.
Still within the concept of a greater concentration of the production mix toward ethanol, SAFRAS & Mercado expects an average mix for the entire 2026/27 crop of 54% ethanol and 46% sugar. The most recent short-term Unica data, still referring to the first half of April, show that 67% of harvested cane was allocated to ethanol, while the five-year average for the same period is around 61%. Prior to that, SAFRAS & Mercado notes that data from both the first and second halves of March already included dozens of mills that had started crushing early for the current 2026/27 crop.
During that period, it was possible to observe that in the first half of March the ethanol production mix stood at 95%, while the five-year average for the same period was 82%. Then, in the second half of March, the ethanol mix stood at 75%, compared to a five-year average of 70% for the same period. Therefore, considering both halves of March and the first half of April as already belonging to the new 2026/27 crop cycle, we can observe an average ethanol mix around 79%, while the five-year average for the same period stands at 71%. Looking only at sugarcane ethanol supply, without considering corn ethanol, it is clear that the ethanol oversupply has led mills to intensify ethanol stock-building once again.
According to SAFRAS & Mercado estimates, in the first half of May the Center-South held accumulated hydrous ethanol volumes around 1.42 billion liters. This volume was 22% higher than the accumulated volumes in the immediately preceding period, the second half of March, when stocks stood at 1.17 billion liters. Besides the 22% increase from the previous period, volumes were also 30% higher year-over-year compared to the same period of the previous crop season. However, SAFRAS & Mercado notes that despite the strong year-over-year and period-over-period increase, there is relative alignment with the five-year average for the same period, currently around 1.40 billion liters.
The same can be said for anhydrous ethanol stocks accumulated in the Center-South through the end of the first half of May, totaling 826 million liters. This volume is 18% higher than the accumulated stock in the immediately preceding period, the second half of April, when stocks totaled 700 million liters. In the year-over-year comparison against the first half of May 2025, current volumes are 42% higher. Compared to the five-year average for the same period, currently around 702 million liters, we observe a 17% increase in accumulated anhydrous ethanol stocks in the Center-South through the end of the first half of May, according to SAFRAS & Mercado estimates.
In addition to higher cumulative stock levels overall, we are also seeing significant movements in stock-building. Our estimate indicates that during the first half of May approximately 257 million liters of hydrous ethanol, from both sugarcane and corn, were added to Center-South stocks. This volume is 17% higher than that observed in the same period last year, when 218 million liters of hydrous ethanol were added to Center-South inventories. Compared to the immediately preceding period [the second half of April], this represents a 44% increase versus the 178 million liters added to hydrous ethanol stocks at that time.
Compared to the five-year average for the same period, currently around 185 million liters usually added to hydrous ethanol stocks during the first half of May, this represents a 38% increase. The same applies to anhydrous ethanol. During the first half of May, approximately 126 million liters of anhydrous ethanol from both corn and sugarcane were added to Center-South inventories. This volume represents a 14% decline year-over-year compared to the 147 million liters added in the first half of May 2025. However, compared to the previous period, there was a 68% increase versus the 75 million liters added during the second half of April this year. Compared to the five-year average for the same period, there was a 16% decline in the first half of May, when usually around 151 million liters of anhydrous ethanol are added to Center-South inventories.
