Porto Alegre, June 26, 2026 –Brazil’s physical ethanol market experienced another week of limited price fluctuations during the third week of June, with trading activity continuing at a moderate pace. The prevailing market sentiment remains one of caution, with both buyers and sellers maintaining relatively conservative positions amid current supply and demand signals observed toward the end of June.
On the demand side, the reduction in rainfall across sugarcane fields in Brazil’s Center-South region has been an important factor influencing recent market behavior. Improved weather conditions have supported a more consistent recovery in harvesting and cane processing, easing some of the logistical concerns observed over recent weeks. This has left fuel distributors more comfortable regarding short-term supply availability.
As a result, buyers remain active in the market but are taking a less aggressive approach. Distributors continue making spot purchases to replenish immediate inventories but have shown little urgency to expand positions or bring forward larger-volume purchases. In other words, demand remains active but disciplined, contributing to a more balanced trading environment.
On the supply side, the market is beginning to observe a greater downward bias. The resumption of crushing operations at several Center-South production units is expected to increase ethanol availability once again, particularly as more mills recover operational capacity following weather-related interruptions. This gradual increase in production reinforces the perception of more comfortable short-term supply conditions.
This trend is expected to become even more relevant over the coming days. Besides being the last week of the month, the upcoming week traditionally carries a specific commercial dynamic within Brazil’s sugar-energy sector. Historically, the proximity of payroll periods increases the cash generation needs of many mills, raising their willingness to sell on the spot market.
In this context, there is growing potential for some mills to adopt a more flexible commercial approach, accepting slightly lower prices to accelerate cash inflows through additional sales volumes. Such behavior could intensify competition among sellers and generate additional downward pressure on price references.
Another important factor is that the market continues to monitor ethanol’s competitiveness relative to gasoline. Although fuel consumption remains relatively stable, any changes in the price relationship between hydrous ethanol and gasoline at retail stations could directly influence distributors’ purchasing appetite in the coming sessions. Should hydrous ethanol lose competitiveness in certain regions, purchasing activity could slow even further.
Accordingly, the short-term outlook for Brazil’s physical ethanol market continues to point toward stability with a bearish bias. Although there are currently no signs of abrupt selling pressure, the combination of improving supply, increasing crushing activity, and the typical month-end cash needs of mills is likely to result in a somewhat more oversupplied market.
In summary, the week reinforced the perception of a market that remains balanced but is gradually becoming more supply-oriented. Attention now turns to next week, when higher production levels and mills’ liquidity needs may determine whether the market shifts from simple stability toward a more pronounced downward price adjustment.
