Ethanol prices in both the United States and Brazil declined in the first week of March, impacted by changing trade policies, fluctuating corn production, and geopolitical uncertainties. As trade tensions between major ethanol-producing nations persist, the global ethanol market faces pricing challenges influenced by policy decisions, supply chain factors, and demand shifts.

The U.S. ethanol market saw a dip in prices due to increased production and policy uncertainty. The Environmental Protection Agency (EPA) delayed expanding sales of higher ethanol blends (E15) in South Dakota and Ohio by one year, creating uncertainty about demand growth. The delay affects fuel producers and retailers who were preparing for expanded sales in the summer.

Growing trade tensions also posed threats to exports to Canada which is a significant market. Canada is considering at imposing tariffs on U.S. ethanol in response for possible U.S. tariffs on Canadian goods. Reduced buyer interest and downward price pressure caused this uncertainty. Additionally, the USDA kept its 2024-25 ethanol corn use forecast at 5.5 billion bushels, reflecting stable production expectations but limiting price gains.

Brazil’s ethanol prices also fell in early March due to rising domestic production and trade policy discussions with the U.S. The country’s corn ethanol production is projected to increase significantly, with forecasting a rise from 6 billion liters to 10 billion liters approx. This production boost, driven by expanding infrastructure and new plants, is increasing supply and contributing to price reductions.

Negotiations between the Brazilian and American governments about ethanol tariffs may reduce the present 18% tariff on American ethanol imports. Weaker ethanol pricing and cautious market behavior are signs for uncertainty surrounding the possible policy change. Trade negotiations are becoming more difficult and impacting the overall outlook of the market because Brazil’s sugar industry is advocating for an increase in its export quota to the United States.

In both countries, corn production and trade policies are influencing ethanol prices. The USDA’s March 11 report maintained its corn use forecast, while global trade changes, including reduced Brazilian exports and rising competition from Argentina, add complexity to price movements. Brazil’s efforts to expand its sugar export quota to the U.S. are linked to ethanol trade talks, with potential outcomes influencing future price trends.

As per ChemAnalyst database, in the upcoming weeks, Ethanol prices in both countries are expected to remain volatile as trade negotiations and policy decisions unfold. Brazil’s expanding corn industry and tariff talks add more layers of complexity, while the U.S. faces domestic regulatory concerns and possible trade barriers. To assess ethanol pricing in the coming months, market participants will closely keep an eye on the policy developments, production patterns, and international trade flows.