Ethanol Exports Surge

China Stays out of US Market

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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Ethanol exports from the United States surged in July, although China remains out of the market. (DTN file photo by Chris Clayton)

OMAHA (DTN) -- Exports of ethanol produced in the United States spiked in July to about 69.3 million gallons, for a whopping 49% increase from June, according to a news release from the Renewable Fuels Association. It was the highest monthly total since April.

Canada was the top importer of U.S. ethanol at about 19.9 million gallons. For the second-consecutive month there were zero ethanol exports to China.

Also in July, exports of dried distillers grains, or DDGs, surged to a nine-month high of 1.094 million metric tons, or an increase of about 9% from June.

China was the top importer of U.S. DDGs for a third-consecutive month, taking in about 358,900 metric tons.

Geoff Cooper, senior vice president of the Renewable Fuels Association, told DTN there are a number of factors driving China's lack of interest in U.S. ethanol.

"China is still sitting on huge stocks of corn," he said. "In May the Chinese started auctioning off some of the old-crop corn that was going out of condition to domestic industrial processors, including ethanol plants. So, China's ethanol plants are significantly ramping up production to help draw down China's corn stocks and that means there is less need to import ethanol from the U.S. or elsewhere."

Cooper said there likely will not be "big export volumes" to China until later in the year or early next year, "after China's massive corn reserves are drawn down somewhat."

Also this week, China announced it was giving a 13% export tax rebate to Chinese producers who export certain corn products including ethanol, Cooper said.

While the rebate program is not expected to result in China actually exporting meaningful volumes of ethanol, he said it does have the effect of making imports "less competitive and serves as a barrier to entry."

Some other highlights:

-- Following Canada as the top U.S. ethanol importer were Brazil (15.2 million gallons) and India (11.2 million gallons). So far in 2016 total U.S. ethanol exports stood at 516.4 million gallons. According to RFA, exports are on track to eclipse the 880 million gallon level for calendar year 2016.

-- Denatured fuel ethanol exports increased by 7% from June, up to 22 million gallons in July. Canada was the top market accounting for 19.9 million gallons. Denatured ethanol has an additive to make it poisonous to drink.

-- Undenatured fuel ethanol exports surged to 44.1 million gallons in July, or nearly double the 23.6 million gallons shipped in June.

-- When it comes to ethanol imports into the U.S., about 10.5 million gallons was imported from Brazil in July, according to the RFA, which was identical to imports from Brazil in June.

-- DDGs exports to countries other than China include: Mexico (147,779 metric tons), Vietnam (116,180), South Korea (80,460) and Thailand (61,744). According to the RFA shipments to both Vietnam and Thailand were the highest of the year to those countries.

Todd Neeley can be reached at todd.neeley@dtn.com

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(CZ)

Todd Neeley