Brazil ethanol exports to California rise with high carbon prices: Datagro

Source: By Marcelo Teixeira, Reuters • Posted: Tuesday, October 29, 2019

SAO PAULO (Reuters) – Brazilian ethanol exports to California have been boosted recently by high carbon credits prices in the Californian market, which led to premiums to cane-based ethanol, Brazil’s Datagro consultancy said on Monday.

Datagro’s chief analyst Plinio Nastari said Brazilian ethanol receives a price premium to enter the California market due to its smaller carbon footprint compared with corn-based ethanol, what has allowed for increased volumes of exports in the last two months.

Nastari estimates Brazil shipped 650 million liters (171.7 million gallons) of ethanol to California from January to September, double the volume seen in the same period a year earlier.

That trade helped boost overall Brazilian exports this year, which are at 1.45 billion liters, 24% higher than last year.

“When you add the price premium for advanced ethanol (RIN), Brazilian ethanol arrives in California currently around 7% cheaper than U.S. ethanol, so it is competitive,” he said.

Higher prices for California carbon credits tend to lead to higher premiums for advanced biofuels, with smaller carbon footprint, the analyst said.

Nastari said premiums for Brazilian cane-based ethanol are as large as $200 per million liters currently.

“That has kept the export window for California opened for some time, that’s why we are seeing ships with Brazilian ethanol heading to the U.S.,” he said during a presentation at Datagro’s sugar conference in Sao Paulo.

Reporting by Marcelo Teixeira; Editing by Marguerita Choy