{"id":13516,"date":"2026-04-20T06:44:25","date_gmt":"2026-04-20T06:44:25","guid":{"rendered":"https:\/\/commodityconversations.com\/wordpress2\/?p=13516"},"modified":"2026-04-18T16:33:03","modified_gmt":"2026-04-18T16:33:03","slug":"corn-versus-cane-again","status":"publish","type":"post","link":"https:\/\/commodityconversations.com\/wordpress2\/2026\/04\/20\/corn-versus-cane-again\/","title":{"rendered":"Corn versus Cane (again)"},"content":{"rendered":"

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\n<\/span><\/p>\n

A Conversation with Martin Todd<\/span><\/strong><\/p>\n

Martin was previously managing director\/CEO of LMC International, an economic consultancy of 50+ staff covering the global agriculture sector. In addition to <\/span>his<\/span> managerial role, <\/span>he <\/span>contributed to projects in <\/span>his<\/span> primary area of expertise: sugar, starch & starch-based sweeteners, as well as a range of cross-commodity issues.<\/span> He now works as an independent consultant.<\/span><\/p>\n

AI Summary<\/span><\/strong><\/p>\n

\u2022 <\/span>Safrinha<\/span>\u2011<\/span>based corn ethanol has a clear cost edge over cane ethanol in Brazil.<\/span><\/div>\n
<\/div>\n
\u2022 <\/span>Corn ethanol growth could reverse ethanol\u2019s role as a floor for sugar, leading to more Brazilian sugar exports and weaker world prices.<\/span><\/div>\n
<\/div>\n
\u2022 <\/span>Synergies between producing sugar in different geographies are often not as great as expected and companies have often been more successful diversifying within the broader food sector in their core geography.<\/span><\/div>\n

 <\/p>\n

Good afternoon, Martin, and welcome to Commodity Conversations. Last week, <\/span>I interviewed Christoph Berg about <\/span>the <\/span>corn versus sugarcane<\/span> title fight<\/span>. He argue<\/span>d<\/span> that it is cheaper in Brazil to produce ethanol from corn than from sugarcane. What\u2019s your take on it?<\/span><\/strong><\/a><\/p>\n

I agree <\/span>with him <\/span>that corn ethanol in Brazil is currently cheaper <\/span>to produce <\/span>than cane ethanol, commonly<\/span>\u00a0quoted as about 30<\/span> per cent<\/span> low<\/span>er.<\/span><\/a><\/p>\n

How did this happen? How do you explain it?<\/span><\/strong><\/p>\n

The story is tied to <\/span>the development of<\/span> corn production in Brazil\u2019s Centre<\/span>\u2011<\/span>West (Goi\u00e1s, Mato Grosso, etc.)<\/span><\/a>.<\/span> These frontiers were opened by soybeans, not corn.<\/span> Soybeans are the world\u2019s key protein crop, with a much higher value per ton<\/span>ne<\/span> than corn<\/span>.<\/span> A<\/span> rule of thumb is <\/span>that <\/span>soybean prices<\/span> are roughly <\/span>2.4 times <\/span>corn prices.<\/span><\/a> Because soybeans are higher<\/span>\u2011<\/span>value, they can bear long<\/span>\u2011<\/span>distance transport costs (1,000\u20132<\/span>000<\/span> km to ports) better than corn.<\/span><\/a><\/p>\n

Brazilian farmers then<\/span>\u00a0started to <\/span>double<\/span>\u2011<\/span>crop<\/span> corn,<\/span> growing<\/span><\/a> s<\/span>oybeans in the main <\/span>rainy<\/span>\u00a0season (Safr<\/span>a) and c<\/span>orn in the second crop (safrinha) immediately after early soy harvests, taking advantage of residual soil moisture.<\/span><\/a><\/p>\n

Safrinha corn is typically a low<\/span>\u2011<\/span>input, low<\/span>\u2011<\/span>output crop<\/span><\/a>. <\/span>Yields are lower than <\/span>those o<\/span>f corn <\/span>grown as the <\/span>main crop.<\/span> Inputs such as fertiliser are also lower, improving the cost profile per hectare.<\/span><\/p>\n

But when corn prices are low, much of its value can be lost in logistics if you try to ship it directly to the coast.<\/span><\/a><\/p>\n

Brazil has responded by \u201cintensifying\u201d value in the interior<\/span><\/a>, b<\/span>uilding large poultry and livestock complexes, turning corn and soy into higher<\/span>\u2011<\/span>value meat products,<\/span> a<\/span>nd building corn<\/span>–<\/span>ethanol plants, which <\/span>us<\/span>e roughly 2.<\/span>4<\/span>\u00a0ton<\/span>ne<\/span>s of corn per cubic metre of ethanol, <\/span>thereby <\/span>creating a more valuable and more transportable product (ethanol).<\/span><\/a><\/p>\n

On the environmental side, the comparison is more complex. In the US Midwest, corn ethanol plants<\/span>\u00a0typically<\/span> burn natural gas; in Brazil, many corn ethanol plants have used biomass (wood chips, etc.) as fuel because of limited gas pipeline infrastructure, which may improve their carbon footprint.<\/span><\/a><\/p>\n

At the same time, cane is an extremely productive crop in terms of fermentables per hectare<\/span><\/a>. <\/span>Cane can yield 70\u201380 <\/span>mt<\/span>\/ha with around 14 <\/span>per cent<\/span> fermentable sugars (including molasses), giving perhaps <\/span>10-11<\/span>\u00a0ton<\/span>ne<\/span>s of fermentables per hectare<\/span>.<\/span> Safrinha corn might yield <\/span>5-7 <\/span>mt<\/span>\/ha, of which roughly 60<\/span> per cent<\/span> is starch, giving <\/span>3\u2013<\/span>4<\/span>\u00a0tonnes<\/span> of fermentables per hectare.<\/span><\/a><\/p>\n

So, in rough terms, cane can provide about three times as much fermentable material per hectare as Safrinha corn, implying strong CO\u2082 sequestration per hectare. The overall carbon balance depends on many factors (land<\/span>\u2011<\/span>use change, fertiliser, mechanisation, energy source at the plant), <\/span>so I would be cautious about general claims that corn ethanol is more environmentally friendly than cane ethanol<\/span>.<\/span><\/a><\/p>\n

So, who wins: cane or corn? <\/span><\/strong><\/p>\n

Cane and corn each have distinct strengths<\/span><\/a>.<\/span> Corn has lower input requirements in the Safrinha system, can piggyback on soybean driven<\/span> frontier expansion, and is a good fit for interior value added<\/span>\u00a0processing.<\/span> Cane has very high yields, large fermentable output per hectare, and bagasse Basse\u2019s <\/span>energy during processing.<\/span><\/p>\n

Even so, as I said, cane ethanol in Brazil costs about 30 per cent less to produce than sugarcane ethanol. <\/span><\/p>\n

What does this mean for the sugar market going forward?<\/span><\/strong><\/p>\n

Corn ethanol <\/span>production<\/span> in Brazil is growing <\/span>faster than the domestic ethanol market. This means<\/span> corn ethanol is steadily gaining market share over cane ethanol because it is cheaper, unless corn prices rise.<\/span><\/p>\n

\u00a0<\/span>In this scenario, c<\/span>orn<\/span> ethanol <\/span>producers may<\/span> push ethanol prices lower to gain market share,<\/span> prompting<\/span> cane mills <\/span>to<\/span> shift to sugar rather than follow ethanol prices down.<\/span><\/a> This adds downward pressure on world sugar prices because more Brazilian sugar must be exported, potentially squeezing out higher<\/span>\u2011<\/span>cost exporters.<\/span><\/p>\n

For most of my career, we thought of ethanol as providing a floor <\/span>for<\/span> sugar prices. Going forward, with corn ethanol undercutting cane, that relationship may change: <\/span>mills<\/span> may need to build more crystallisation capacity to avoid being trapped<\/span> into<\/span> selling ethanol in a market where <\/span>thei<\/span>r competitor has a<\/span> big<\/span>\u00a0cost advantage.<\/span><\/a><\/p>\n

<\/a><\/p>\n

In your projected scenario, Brazilian mills will no longer be able to compete in ethanol production and will switch to sugar. Brazil will export the surplus sugar, pushing down the world price and driving out less-efficient producers. Which producers will be driven out<\/strong>?<\/span><\/a><\/p>\n

The impact will be strongest in countries where<\/span><\/a> the <\/span>world sugar price passes through to the farm<\/span>\u2011<\/span>gate cane or beet price, and<\/span> f<\/span>armers have viable alternative crops.<\/span><\/p>\n

Examples<\/span><\/a> could include <\/span>Thailand<\/span>,<\/span> where f<\/span>armers can grow <\/span>cassava,<\/span> rice, corn, and other crops<\/span>. Lower sugar<\/span>\u00a0prices <\/span>would<\/span> may<\/span> make it harder for millers to secure cane and<\/span> trigger <\/span>a<\/span> gradual<\/span> switch away from cane<\/span> crops<\/span>.<\/span> The same may apply to other regions in <\/span>Asia where labour constraints and limited mechanisation already undermine cane competitiveness.<\/span><\/p>\n

Another example is the <\/span>EU beet sector<\/span>. <\/span>Beet is grown in rotation with other crops, and EU protection has already been reduced, <\/span>leav<\/span>ing the sector more vulnerable.<\/span><\/a> In such regions, sustained lower prices will likely lead to <\/span>a reduction in<\/span> beet<\/span>\u00a0area rather than simply lower incomes.<\/span><\/a><\/p>\n

Countries <\/span>such as<\/span> Australia, where there are fewer obvious alternatives in cane regions, may instead experience lower land values and grower incomes, but not necessarily large<\/span>\u2011<\/span>scale area abandonment.<\/span><\/a><\/p>\n

Will the EU become a major importer?<\/span><\/strong><\/a><\/p>\n

In markets with large industrial sugar consumption \u2013 such as the EU \u2013 the supply chain for users is sophisticated and tightly managed<\/span><\/a>.<\/span> Factories need specific qualities of sugar.<\/span> Deliveries are often just<\/span>\u2011<\/span>in<\/span>\u2011<\/span>time, in bulk or liquid form, sometimes multiple times per day, into silos managed with telemetry.<\/span><\/p>\n

You can\u2019t simply replace domestic production with bagged imports from the <\/span>global<\/span> market. To become a major importer, the EU would need a much larger refining and logistics industry <\/span>to<\/span> bridg<\/span>e the gap<\/span> between raw sugar imports and industrial users\u2019 requirements.<\/span><\/a><\/p>\n

There is already a small refining sector, which s<\/span>er<\/span>ves as the conduit between world raw sugar and highly demanding customers. If domestic beet production falls further, the EU could import more, but this would <\/span>requir<\/span>e a structural transformation of the industry and logistics system rather than a simple switch from domestic beet to imported<\/span> white<\/span> raw<\/span> sugar.<\/span><\/a><\/p>\n

In general, sectors where farmers have alternative crops and where labour or mechanisation <\/span>constraint<\/span>s are acute \u2013 notably<\/span> in<\/span> much of Asia \u2013 are likely to struggle most to maintain sugar production if Brazilian exports grow and prices weaken.<\/span><\/a><\/p>\n

If I were an EU sugar producer and came to you to say I wanted to diversify by building a plant in another country, what would you tell me? <\/span><\/strong><\/p>\n

First, I would ask why you want to diversify within the sugar sector.<\/span><\/a> Just because you produce beet sugar in Europe does not necessarily imply strong synergy with producing cane sugar in Brazil or elsewhere. Sugar markets tend to operate within their own regional orbits, with the main link being the world market for the traded share (30\u201335 per cent of global production).<\/span><\/a>\u00a0<\/span><\/p>\n

If you look at history, <\/span>several<\/span> sugar companies that have done well have used surplus cash flow from sugar to diversify into other food or consumer businesses rather than into sugar in other geographies<\/span><\/a>.<\/span><\/p>\n

Danisco and CSM are examples of European companies that successfully evolved beyond <\/span>sugar businesses.<\/span><\/a> British Sugar\u2019s parent group invested in Primark, originally a small Irish retailer, using sugar profits to build it into one of the largest fast fashion<\/span>\u00a0retailers. It is now separating the agricultural business from the retail business to unlock value.<\/span><\/a>\u00a0<\/span><\/p>\n

In contrast, companies like Tate & Lyle, which once had sugar factories around the world, <\/span>divested of its sugar <\/span>operations<\/span> and<\/span> no longer produce sugar as a quoted company. The<\/span> Tate & Lyle sugar brand is now owned by ASR.<\/span><\/p>\n

M<\/span>y advice would be<\/span><\/a> to <\/span>q<\/span>uestion whether geographical diversification within sugar truly adds valu<\/span>e, and to c<\/span>onsider diversifying <\/span>into other food or consumer sectors where your capital and competencies may yield better long<\/span>\u2011<\/span>term returns.<\/span><\/p>\n

Thank you, Martin, for your time and input. <\/span><\/strong><\/p>\n

\u00a9 Commodity Conversations\u00ae2026<\/span><\/strong><\/p>\n

\"\"<\/p>\n","protected":false},"excerpt":{"rendered":"

A Conversation with Martin Todd Martin was previously managing director\/CEO of LMC International, an economic consultancy of 50+ staff covering the global agriculture sector. In addition to his managerial role, he contributed to projects in his primary area of expertise: sugar, starch & starch-based sweeteners, as well as a range of cross-commodity issues. He now … <\/p>\n

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