cargo at port

U.S. ethanol exports continue upward streak

February and March export volumes break records far exceeding previous record set in 2011.

Seven months into the 2017-18 marketing year, the U.S. has exported nearly 1 billion gal. of ethanol, up 15% year over year and an indication of how ethanol exports support U.S. grain demand, the U.S. Grains Council (USGC) reported.

March ethanol exports exceeded 215 million gal., the second-highest monthly sales on record after the record of nearly 220 million gal. in February 2018. Both months far exceed the previous monthly export record of 178 million gal. in December 2011, USGC noted.

“The incredible cost-competitiveness of U.S. ethanol has enabled sales to break through tariffs and set new records despite numerous trade policy issues,” USGC chief economist Mike Dwyer said. “U.S. ethanol remains on track for another banner year of exports.”

Brazil remains the top importer of U.S. ethanol, with 96 million gal. in sales in March 2018, bringing its total for the marketing year to almost 349 million gal. USGC said these sales occurred despite a slow start following the implementation of a 20% tariff on imports outside a quota equaling approximately 40 million gal. quarterly.

USGC

“Last year, U.S. ethanol had duty-free access to the Brazilian market, resulting in higher-than-ever exports,” Dwyer said. “This year, U.S. ethanol is subject to a 20% out-of-quota tariff yet is already up 12% year over year, further demonstrating that Brazil does not have enough ethanol to meet demand as well as the economic advantage of U.S. supplies.”

While sales to Brazil are expected to cool slightly due to the beginning of the country's sugarcane harvesting season, Dwyer said the U.S. is on track to potentially set another record for ethanol exports to the Brazilian market this marketing year.

USGC reported that other large year-over-year increases in demand similarly came from markets where U.S. ethanol is subject to high tariff measures.

Sales to China are up 57% year over year to 77.4 million gal. so far this marketing year, making China the fourth-largest export market for U.S. ethanol. However, it is unclear if the U.S. will export any additional ethanol to China this marketing year following the imposition of another 15% tariff on top of the existing 30% tariff on U.S. product.

USGC said even with trade barriers in the European Union, U.S. ethanol exports have increased 749% compared to the same time the previous year, to 47.2 million gal. Almost all of these exports are believed to be re-exported to other markets in the Middle East and Africa, not for consumption within the EU.

“Understanding the uniqueness of each international market is key to continued successful promotion of U.S. ethanol,” USGC said. “The council and its biofuels industry partners identify and analyze potential markets and develop strategies tailored to the culture and conditions of each while working closely with established customers who already gain economic, environmental and human health benefits from ethanol.”

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