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Argentina to Produce Record Amounts of Ethanol in 2026, Biodiesel Output to Jump by 8%, USDA says

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The US Department of Agriculture estimated in its Global Agricultural Information Network report on Friday that biodiesel production in Argentina will grow by 8% over last year, while ethanol output is set to reach a record.

Argentina's fuel ethanol production is expected to reach a record 1.35 billion liters in 2026, according to the USDA report.

Output is expected to be driven up by record domestic consumption, additional corn-based production capacity, and a March 2026 regulation allowing fuel distributors to blend up to 15% ethanol through voluntary agreements, above the mandatory 12% rate, according to the USDA.

Corn-based ethanol is expected to account for about 60% of Argentina's output, while stronger domestic demand is forecast to modestly reduce exports.

Biodiesel production is projected at almost 1.2 billion liters, up 8% from 2025, as higher domestic use more than offsets weaker exports, according to the USDA.

"However, exports are forecast at their lowest level since 2007, and the industry is expected to operate at only about 27% of installed capacity. Proposed legislation under consideration would raise the ethanol mandate to 15%, and the biodiesel mandate to 10%, but biodiesel provisions remain politically contentious," the USDA stated.

In its report, the USDA noted that Argentina's biofuels sector is entering a period of significant policy transition.

Although the current Biofuels Law is still in force until 2030, the government recently proposed new legislation to liberalize the market.

This includes increasing blending mandates and establishing a regulatory framework for advanced biofuels, including Sustainable Aviation Fuel, renewable diesel, hydrogen, and biomethane.

Approval of a new biofuels law would represent the most significant reform of Argentina's biofuels sector since the original Biofuels Law was enacted in 2006, according to the USDA.

The proposed reform would increase the national bioethanol blending mandate from 12% to 15% and the biodiesel mandate from 7.5% to 10%, while replacing government-administered pricing with a transparent, market-based trading system.

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