Ethanol Blog

Changing Face of US Ethanol Export Markets

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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The face of ethanol exports from the United States continue to evolve. (DTN file photo)

Historically, India and Brazil have been two major export destinations for ethanol produced in the United States.

All the while, both India and Brazil are stepping up efforts to produce more ethanol.

In India this week, stocks in sugarcane companies spiked in anticipation of the Indian government's expected move to grow ethanol production, according to the Economic Times in India on Tuesday, https://economictimes.indiatimes.com/….

A company called Uttam Sugar Mills saw its stock rise by about 20% on Tuesday. Earlier this year the Indian government raised the price of ethanol produced using sugarcane by 25%.

In addition, the Times said the government plans to move to 20% ethanol blends by 2030 and to provide loans to sugar mills to build ethanol plants.

The Times said it is expected Indian sugar producers will benefit from Brazil's increased use of its sugar for its own ethanol production, which could cause a shortfall in world sugar supplies. Indian press outlets have reported the government has received more than 160 loan applications from sugar mills planning to launch ethanol production.

In Brazil, Reuters reported on Wednesday, https://af.reuters.com/…, the nation's ethanol inventories have grown by 29% this past year as of Oct. 1. In addition, Brazilian Secretariat of Foreign Trade data shows the nation's ethanol import volumes hit their lowest level in three years in September.

The ethanol markets in Brazil and India are of critical importance to the industry in the United States, as they were two of the top three export markets in 2017.

In 2017, Brazil was the top importer of U.S. ethanol at 445.7 million gallons, followed by Canada at 328 million and India at 172.7 million, according to the Renewable Fuels Association.

The total imports for 2017 represented a 60% increase to Brazil and an 89% increase to India, compared to 2016.

As the future of the Indian and Brazilian ethanol markets remain in flux, it's important to note that prior to import tariffs launched in 2011 the European Union was one of the top export market for U.S. producers.

Perhaps one of the most important trade negotiations yet to come for ethanol, is President Donald Trump's administration's move to talk trade with the EU.

Trump announced intentions to rework trade deals with the EU, among others, and that agriculture will be a key component of trade discussions.

However, RTE radio in Ireland reported on Thursday, https://www.rte.ie/…, that so far trade talks with the EU have not gone well.

Ethanol exports to the EU in 2011 were 295.9 million gallons, which represented 25% of the total exports of 1.193 billion gallons that year.

Exports to the EU were 173.6 million gallons in 2012, or 24% of total U.S. exports, as the tariff didn't really take effect until 2013. Following the tariffs, the EU import volume plummeted to around 25 million gallons in 2013.

Also keep in mind, Japan may soon be in the mix as a U.S. export destination.

In April 2018, Japan announced it would allow 44% of its 217-million-gallon ethanol demand to produce ethyl tert-butyl ether, or ETBE, which is commonly used as an oxygenate in gasoline, to come from corn-based ethanol. This opens the door for a potential 96-million-gallon export market for U.S. producers.

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

Follow me on Twitter @toddneeleyDTN

(TN)

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