Brazil Ethanol Exports to Drop to 11-Year Low, Dreyfus Unit Says

Source: By Lucia Kassai, Bloomberg • Posted: Wednesday, April 30, 2014

eEthanol exports from Brazil, the world’s largest shipper, are expected to drop to the lowest in 11 years as the U.S. plans to cut biofuel mandates, an official at a Louis Dreyfus Holding BV unit said.

Brazil will ship 395.8 million gallons (1.5 billion liters) this year, down 46 percent from last year’s 738.8 million gallons, Enrico Biancheri, commercial officer at Sao Paulo-based Biosev SA (BSEV3), said. That’s the lowest since 2003, according to data from sugarcane industry groupUnica.

“Demand from the U.S., which absorbs about 70 percent of our ethanol, may drop significantly,” Biancheri said in a telephone interview from Sao Paulo today. “Besides, they have plenty of cheap corn right now, and price-wise it doesn’t make sense to ship to the U.S.”.

Brazil exported 88.7 million gallons in the first quarter, a drop of 47 percent from a year ago, data from the country’s foreign trade secretariat show.

While ethanol has become cheaper in the U.S. with ample supplies of corn, Brazil has lost its edge as sugarcane crops failed because of harsh weather. U.S. distillers use corn to produce ethanol and dried distillers’ grains, a co-product used in animal feed. Brazil processes sugarcane into sugar and ethanol.

Sugar & Ethanol

The U.S. Environmental Protection Agency has proposed cutting the amount of ethanol blended with motor fuel. A final ruling is expected for this year.

Brazil’s Center South, the world’s largest sugarcane producing region, will harvest 580 million metric tons in the season that started April 1, down 2.8 percent from the previous period, Biancheri said.

The area will produce 33.5 million tons of sugar and 6.78 billion gallons of ethanol, he said. That compares with 32.5 million tons of sugar and 6.83 billion gallons in a Unica estimate.

Louis Dreyfus indirectly holds 58.4 percent of Biosev, according to Biosev’s website.