Brazil biofuel sales to drive higher CBios credit generation

Increased production and sales of ethanol and biodiesel in Brazil are expected to drive a higher-than-anticipated generation of decarbonization credits (CBios) this year. StoneX has raised its annual estimate for CBios generation by 400,000 credits compared to its March projection, now forecasting a total of 45.45 million credits.

The surge in CBios is primarily driven by rising ethanol sales, which are expected to generate 37.4 million credits, a 6.4% increase. This growth is linked to lower prices for hydrated ethanol and an increase in the anhydrous ethanol blend in gasoline to 32%. Additionally, biodiesel sales are projected to reach a record 7.8 million CBios, representing a 5.3% increase.

Despite recent fluctuations in sugar prices, market analysts suggest that ethanol production potential remains high. The increased supply of these credits is expected to keep asset prices at historically low levels, with CBios currently trading at approximately R$ 25 per credit.