Could U.S. Tariffs Disrupt Brazilian Sugar and Ethanol?
Marcelo Bonifacio, StoneX Brazil Market Intelligence Analyst, outlines how proposed U.S. tariffs could impact Brazilian sugar and ethanol exports and reshape U.S. markets.
Key Takeaways
U.S. sugar and ethanol markets rely heavily on Brazilian supply
Short-term impacts are limited due to high U.S. stock levels
Carbon emissions advantages keep Brazilian ethanol in demand
Brazil’s Role in U.S. Sugar Supply
Bonifacio explained that Brazil is a major player in global sugar exports and one of the few markets that can step in when U.S. supply needs rise. “The U.S. depends on Mexico exports… and Brazil stand as a big player that can occupy some spaces”. With other exporters like Mexico facing tariff pressure too, the U.S. could find itself with limited options.
Short-Term Impact Is Minimal
Despite the threat of a 50% tariff, Bonifacio believes the short-term impact will be limited. “The U.S. accumulated a lot of stocks on the previous year… from Brazilian exports and from a big crop around the world”. These stockpiles provide a temporary cushion, reducing the immediate urgency to secure new imports.
Why US Still Buys Brazilian Ethanol
One key reason is Brazil’s sugarcane-based ethanol, which has lower carbon emissions than US corn ethanol. “The sugar cane ethanol has lower carbon emissions… so the US imports a lot from Brazil”. Programs like the Renewable Fuel Standard and California’s LCFS create demand for cleaner fuels, making Brazilian ethanol more attractive despite tariffs.
Will Buyers Keep Importing Ethanol?
The answer depends on how high tariffs go. Bonifacio notes that while some U.S. buyers may reduce volumes, others may continue importing. “Maybe with just 50% tariff, this imports may decrease… but punctual buyers will continue to look for Brazilian sugarcane ethanol”. The environmental advantages still matter—but cost may soon outweigh them.
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---- Written by Frederic Guetin, StoneX TV Producer
---- Expert: Marcelo Bonifacio, StoneX Brazil Market Intelligence Analyst
Sugar
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