Brazilian ethanol: cane, not corn, and the difference it makes

Brazil is one of the two largest ethanol producers in the world, and unlike most origins it makes ethanol from sugarcane rather than corn. That single fact, cane instead of grain, gives Brazilian ethanol a lower carbon score and ties its supply to the same mills and the same harvest that produce sugar. For a buyer, ethanol and sugar are two products from one plant, and the mill chooses between them season by season.

There are two main grades. Hydrous ethanol carries a few per cent water and is used directly as fuel in flex engines, the common form in the Brazilian domestic market. Anhydrous ethanol is dehydrated, close to pure, and is the grade blended into gasoline and the one most international buyers want. The specification difference is water content, and it governs everything downstream: storage, blending and price.

• Type, hydrous or anhydrous, with the alcoholic strength (anhydrous runs around 99.3 to 99.9 per cent by volume).
• Water content, acidity and appearance.
• Denatured or undenatured, since some markets require a denaturant.
• Whether it is fuel-grade or an extra-neutral, industrial or beverage alcohol, which is a different product entirely.
• Bulk delivery mode, ISO tank, flexitank or vessel parcel, and the loading port.

Because cane feeds both sugar and ethanol, the mill's split between the two moves with relative prices and with the harvest calendar. In a season where sugar pays better, ethanol tightens, and the reverse holds when ethanol is the better return. A buyer who understands that reads an ethanol offer the way they read a sugar one, against the crop, not in isolation.