European ethanol industry faces potential aflatoxin-hit crops

Ethanol market participants in Eastern and Central Europe raised concerns that the new corn crop may be contaminated with aflatoxin, which could affect the supply of ethanol in the region.

Apart from Bulgaria, where the crop situation is looking slightly better than 2024 due to more rain this year, the weather has been dry elsewhere and conditions have been optimal for aflatoxin, sources said.

Market participants in those regions reported difficulties securing feedstocks to produce ethanol due to contaminated crop from last year’s harvest.

“Good corn is difficult to find,” said a producer based in Eastern Europe.

Some ethanol producers in Eastern and Central Europe were struggling to fulfill their term contracts for the summer months and turned to the Amsterdam-Rotterdam-Antwerp region to secure volumes despite the costly and challenging logistics.

To hedge their losses against potential aflatoxin contamination, corn farmers planted fewer corn crops.

“The problem is farmers don’t trust corn anymore because it was bad the past two years, and they’re trying to do other stuff now,” the producer said. “This means the crop situation will be bad again this year because the weather wasn’t optimal and farmers planted less than usual.”

Ethanol plants still undergoing maintenance in the region were meant to restart in July. However, restarting has been delayed as plants await the September harvest and confirmation of crop conditions.

“The aflatoxin was last year’s harvest story, and I hope it doesn’t repeat this year as well,” said a source based in Central Europe.

Corn traders skeptical about quality

In the latest World Agricultural Supply and Demand Estimates report published Aug. 12, the US Department of Agriculture reduced corn production projections in the EU by 3% for marketing year 2025-26 from their July forecast due to heat damage and crop failures.

Traders in Romania indicated that the initial production prospect of 11 million mt for MY 2025-26 has diminished due to crop damage from the hot weather, raising concerns about quality.

“There is a possibility of toxins this year. The summer was hot,” said a trader from Romania.

In Serbia, the situation is similar, with traders expecting low yields and a poor surplus for export. A seller from Serbia said, “I don’t think we will have any exportable surplus with expected yields of 4-4.5 mt/hectare.”

Traders remain skeptical about the quality of the new crop. Another trader from Serbia said, “Nothing is certain at this point, and we will know for sure when we have our first lots of corn in our silos.”

A trader from Bulgaria said, “The new crop will be as bad as last year. We expect low yields and again, toxins in some regions.”

Due to continued crop failures, farmers in the Balkans are reducing the area under corn production and switching to other crops.

In the EU, the accepted level of aflatoxin for feed production is 20 parts per billion (ppb), and corn with higher levels of aflatoxin is not preferred by feed producers. This leaves producers with the option to either discard severely affected crops or sell them for other purposes.

Traders in Serbia reported that corn affected by aflatoxin was sold to biofuel plants in Hungary, as it was deemed unfit for feed production in MY 2024-25.

The uncertainty regarding the quality of the new crop is also limiting the offerings ahead of the harvest. The trader from Serbia noted, “Nobody is ready to sell. Unknown quality is a significant issue for both buyers and sellers.”

Meanwhile, the new crop prices increased as the new crop growth advanced. Offers for the new crop rose by 5% for FOB CVB from the first week of June to the last week of July.

Waste-based ethanol from aflatoxin-hit feedstocks

Some producers have been able to produce waste-based ethanol with double-counting incentives from the contaminated corn crop. Market participants reported flows of advanced ethanol from contaminated crops from Hungary to the Netherlands and, more recently, to the UK.

The UK Department for Transport confirmed to Platts that ethanol made from aflatoxin-contaminated corn carries double-counting incentives in the UK.

“Aflatoxin-contaminated corn was classified as a double-counting agricultural residue under the Renewable Transport Fuel Obligation (RTFO) on Nov. 15, 2024. Ethanol made from this feedstock is therefore eligible to receive double the number of certificates for every litre of biofuel supplied,” said the DfT.

“One of the main tricks is that the UK allows aflatoxin to be double-counted; it will open it up to European producers,” said a source.

Corn crush margins turn red

European corn crush margins for T2 ethanol production slipped into negative territory for the first time in 2025 during June, hitting minus Eur37.4/cu m according to S&P Global Commodity Insights calculations. While margins briefly recovered to Eur80.28/cu m on July 4, they remained predominantly negative from July 10 through Aug. 8 before edging back into positive territory at Eur4.4/cu m on Aug. 15.

The margin recovery coincided with strengthening T2 ethanol prices, with Platts assessing T2 ethanol at Eur611.75/cu m FOB Rotterdam on Aug. 19, a significant rebound from the June 13 low of Eur560/cu m.

Source: Platts