Argentina's Fuel Ethanol Output Expected to Hit Record 1.35 Billion Liters in 2026

en.Wedoany.com Reported - The Foreign Agricultural Service (FAS) of the U.S. Department of Agriculture reported that Argentina's total fuel ethanol production in 2026 is expected to reach a record 1.35 billion liters (356.6 million U.S. gallons), driven by record domestic consumption and increased corn-based ethanol capacity. The report also noted that the Argentine government is reviewing new biofuel policies.

The FAS mentioned in its report that a regulation introduced in March 2026 allows fuel distributors to voluntarily raise the ethanol blending ratio to 15% above the mandatory 12% blend through voluntary agreements, adding momentum to industry growth. Corn ethanol is expected to account for approximately 60% of production, with the remainder being sugar-based ethanol. Exports are expected to decline slightly due to stronger domestic demand.

Argentina's corn bioethanol industry is benefiting from a record corn harvest in the 2025/26 marketing year (currently more than half complete) as well as additional capacity expansions. Argentina is expected to become the world's third-largest corn exporter, with domestic corn consumption of 18 to 19 million tons, representing approximately 30% of total corn production. Corn used for bioethanol production in 2026 will account for 3% of the country's total corn output. Argentina currently operates 12 corn ethanol plants, one of which produces almost exclusively industrial ethanol.

Biodiesel is also expected to see growth, with production jumping 8% in 2026 to 1.2 billion liters (317 million U.S. gallons). However, exports are expected to fall to their lowest level since 2007, and industry capacity utilization is expected to average only about 27%.

The FAS analysis attributes this growth primarily to strict enforcement of blending mandates following the official biodiesel price update, as well as increased sales in the free domestic market. Biodiesel exports, which go almost entirely to the European Union, are expected to decline by approximately 26% compared to 2025. Shipment pace was slow in the first half of 2026 due to uncertainty in the EU regulatory framework and weak import demand. However, a European Parliament vote in early July confirmed that soybean-based biodiesel will remain eligible under the EU's renewable energy framework.

After the closure of two small biodiesel plants in 2025, Argentina will operate 30 biodiesel plants in 2026 with a total capacity of 4.38 billion liters, a figure that has remained nearly unchanged since 2020.

The FAS stated that Argentina's biofuel industry is in a period of policy transition. The current Biofuels Law (No. 27,640) remains in effect until 2030, and the government recently proposed new legislation that would raise the ethanol blending mandate to 15% and the biodiesel blending mandate to 10%.

According to the FAS, the proposal has sparked intense debate among stakeholders, with disagreements remaining on several key provisions. Nevertheless, it is the first biofuel bill in recent years to gain broad support across most sectors of the industry. The national government, most biofuel-producing provinces, several biofuel associations, and oil companies generally endorse the overall direction of the proposal.

The FAS concluded in its report that Argentina's biofuel outlook is turning optimistic. If the proposed legislation is passed, higher blending requirements, market liberalization, and the introduction of policies supporting sustainable aviation fuel (SAF) and other advanced biofuels could significantly increase domestic consumption, attract new investment, and enhance export opportunities.