TCO Increases Brazil's Corn Ethanol Margins

Why It Matters

TCO adds a lucrative third revenue stream for Brazilian corn‑ethanol plants, enhancing margins and opening new export avenues in the fast‑growing SAF and biodiesel markets.

Key Takeaways

• Brazil to produce 10.5 bn liters corn ethanol in 2026
• TCO output projected to reach 692 mn liters by 2035
• TCO fetches higher SAF bids than biodiesel, boosting margins
• Export potential hinges on certification and freight costs
• Mato Grosso concentration eases domestic logistics for TCO

Pulse Analysis

9 million liters of technical corn oil (TCO) as a by‑product. By 2035, ethanol output could climb to 16 billion liters, pushing TCO production to roughly 692 million liters. \n\nTCO pricing currently tracks reference oils such as soybean oil and used cooking oil, with a premium or discount applied based on quality and acidity.

Because TCO generates more decarbonisation credits, European biofuel buyers are willing to pay higher premiums, especially for SAF applications where the aviation fuel margin outstrips biodiesel. However, Brazil’s domestic market offers limited tax incentives, leading to discounted local prices. \n\nThe emerging TCO market promises to lift overall corn‑ethanol plant margins, turning what was once a low‑value residue into a tradable commodity.

For biodiesel refiners with idle capacity, TCO provides a locally sourced feedstock that can reduce reliance on imported oils. SAF developers, meanwhile, view TCO as a strategic input for hydroprocessed fatty acid routes, potentially accelerating Brazil’s participation in the global aviation‑fuel decarbonisation agenda. Success will depend on aligning certification, logistics and pricing structures, but the combined effect of higher by‑product revenues and expanded export opportunities could reshape Brazil’s biofuel economics over the next decade.