Ethanol will raise US and domestic pressures in Brazil

Significance

Brazil’s quota of 750 million litres expired at the end of August, primarily affecting imports from the United States. Brazilian ethanol, derived mainly from sugarcane, has been already affected by lower demand caused by the COVID-19 crisis. As a result, large Brazilian producers have been redirecting sugarcane production from ethanol to sugar.

Impacts

• Trade negotiations on ethanol will extend to other commodities.
• Ethanol will remain a politically sensitive issue in both Brazil and the United States.
• Developments in continuing negotiations may hinge on US election results.