Brazilian Ethanol Exports to US Surge Despite Tariff
Brazil exported upwards of a record 428 million liters (113 million gallons US) of ethanol in June due to surging demand from the US, according to UNICA, the São Paulo Sugar Cane Agroindustry Union. Exports are likely to increase to 1.5 billion liters (396 million gallons US) by September.
The association now expects to revise up its 2006-07 ethanol export estimates sometime this month from its May forecast of 1.9 billion liters, Unica’s technical director told Dow Jones Newswires.
I think it’s possible that we’ll export 2.5 billion liters (661 million gallons US) this season, even if the US stops buying ethanol after September. I’d say that US demand accounted for over 80% of shipments in June, while direct shipments to the US accounted for over 60%. Exports will be strong until at least September, due to this demand.
—Antonio de Padua Rodrigues
Demand for ethanol in the US has surged given the phase-out of MTBE (which was deemed a public health hazard) as an oxygenating additive.
The US applies a $0.54 per gallon tariff on direct ethanol imports, although it imposes no duty on ethanol shipped via the Caribbean Basin Initiative (CBI) nations. In 2004, Cargill caused a flap in Congress by proposing to import 63 million gallons of Brazilian ethanol into the US via the CBI to avoid the tariff.
By early July 2006, the price of ethanol on the spot market in the US had essentially doubled to $4.00+ per gallon, while the average rack price was $3.75 per gallon, according to AXXIS Petroleum. The wholesale price of Brazilian ethanol, by contrast, was $1.79 per gallon (R 1.02706/liter) last week, according to UNICA.
Unica’s estimate for June exports starkly contradicts export registration data compiled by the Trade Ministry and released by the Agricultural Ministry on Thursday, which pegged June ethanol exports at roughly 166 million liters, 38% lower than the roughly 268 million liters registered to be shipped out in the same period last year.
“I’m not sure why there’s such a big discrepancy in the numbers this time around, perhaps it was due to a strike at the export license division,” said Rodrigues. “The data I have right now is that ethanol shipments hit 428 million liters in June, but I think it will be higher than this. We’re still compiling the final numbers.”
The association now expects to revise up its 2006-07 ethanol export estimates sometime this month from its May forecast of 1.9 billion liters, Unica’s technical director told Dow Jones Newswires.
I think it’s possible that we’ll export 2.5 billion liters (661 million gallons US) this season, even if the US stops buying ethanol after September. I’d say that US demand accounted for over 80% of shipments in June, while direct shipments to the US accounted for over 60%. Exports will be strong until at least September, due to this demand.
—Antonio de Padua Rodrigues
Demand for ethanol in the US has surged given the phase-out of MTBE (which was deemed a public health hazard) as an oxygenating additive.
The US applies a $0.54 per gallon tariff on direct ethanol imports, although it imposes no duty on ethanol shipped via the Caribbean Basin Initiative (CBI) nations. In 2004, Cargill caused a flap in Congress by proposing to import 63 million gallons of Brazilian ethanol into the US via the CBI to avoid the tariff.
By early July 2006, the price of ethanol on the spot market in the US had essentially doubled to $4.00+ per gallon, while the average rack price was $3.75 per gallon, according to AXXIS Petroleum. The wholesale price of Brazilian ethanol, by contrast, was $1.79 per gallon (R 1.02706/liter) last week, according to UNICA.
Unica’s estimate for June exports starkly contradicts export registration data compiled by the Trade Ministry and released by the Agricultural Ministry on Thursday, which pegged June ethanol exports at roughly 166 million liters, 38% lower than the roughly 268 million liters registered to be shipped out in the same period last year.
“I’m not sure why there’s such a big discrepancy in the numbers this time around, perhaps it was due to a strike at the export license division,” said Rodrigues. “The data I have right now is that ethanol shipments hit 428 million liters in June, but I think it will be higher than this. We’re still compiling the final numbers.”
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