By - Jim Vess

U.S. ethanol exports set a record with Brazil and Canada as the two biggest markets

Energize Weekly, May 1, 2019

U.S. fuel ethanol exports rose 23 percent year-on-year to 112,000 barrels a day in 2018—an all-time record, according to the federal Energy Information Administration (EIA).

At the same time, U.S. fuel ethanol imports were down 30 percent to less than 4,000 barrels a day in 2018, leaving the U.S. a net exporter for the ninth year in a row.

Exports were up in 2018 even though the number of foreign markets for the year was cut by half to 17 destinations—with about half the shipments going to Brazil, which increased imports by 20 percent and Canada, where American ethanol purchases rose 7 percent.

Brazil, the world’s second largest producer and consumer of fuel ethanol, saw U.S. imports rise for the fifth straight year to 33,000 barrels a day in 2018, equal to about a third of all U.S. ethanol exports.

Ethanol consumption in Brazil is set by a mandate that fuels must contain 27 percent of the alcohol. It is also driven by the use of hydrous ethanol, so-called E100, fuel. The U.S. also has a Renewable Fuel Standard (RFS) that requires refiners to produce a certain volume of blended fuel each year. In 2019, the target is almost 20 billion gallons.

Ethanol production is tied to the growing season for feedstock crops. Brazilian ethanol comes from sugarcane, which is harvested between May and October. Brazilian ethanol production peaks in the third quarter of the year.

“In early 2018, the price discount associated with ethanol from the United States led to monthly record-high levels of U.S. fuel ethanol exports to Brazil,” the EIA said.

U.S. exports to Brazil hit almost 6 million barrels, equal to 63,000 barrels a day in the first quarter of 2018, a 64 percent increase over the first quarter of 2017. Almost half of all the ethanol exports to Brazil were in the first three months of 2018.

U.S. exports soared even in the face of a 20 percent tariff levied by Brazil on U.S. ethanol in 2017 and a new 20 percent tariff on imports above a 150-million-liter quarterly quota, about 1 million barrels.

Canada, which also has fuel mandates across the Canadian provinces ranging for a 5 percent to 8.5 percent blend, was the second-largest importer of U.S. ethanol, about 23,000 barrels a day in 2018.

India was the third largest market for U.S, at about 10,000 barrels a day, followed by South Korea and the Netherlands. The other 12 importing countries received just less than 35,000 barrels a day of U.S. ethanol exports.

U.S. imports of ethanol, about 4,000 barrels a day, came almost exclusively from Brazil. Strong production from U.S. refineries of corn-based and bio-based ethanol fuel has kept imports low along with preference to bio-based ethanol over imported sugarcane ethanol to meet both the RFS and California’s Low Carbon Fuel Standard (LCFS).

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