US now exporting ethanol
At the Plymouth Energy LLC plant in the heart of the U.S. corn belt — where home-grown fuel from grain was supposed to ease American dependence on foreign oil — every drop of ethanol goes to motorists in Brazil.So, it turns out that the ethanol producers don't really need the mandate forcing more of their product onto US refiners and consumers. While I am not a big fan of ethanol, I have no problem with selling it to others who can use it. The US should let the marketplace determine how much is needed and purchased. This was Ted Cruz's position during the Iowa primary, and it appears he was on to something.
Like many Midwest distillers, Plymouth’s Merrill, Iowa, plant was built a decade ago for a U.S. market that was importing ethanol to satisfy laws mandating increased use of renewable fuels.
Since then, surplus capacity and a glut of cheap gasoline has left the industry navigating losses and looking for new markets. That has helped spur exports as far away as China, but the biggest surprise buyer in recent months has been Brazil, the world’s No. 2 producer.
While Brazil makes ethanol from its sugar-cane crops — the world’s biggest — the cost surged as economic and political turmoil led to accelerating inflation.
As the price of gasoline rose to a record, owners of flex-fuel cars that can switch to ethanol did so, and inventories plunged by 75 percent from a year earlier.
Last month, imported fuel was the cheapest relative to local supply since 2011, offering at least a temporary lifeline to struggling U.S. producers.
“The export market is the only hope the U.S. market has for balancing supply,” said Christoph Berg, managing director of commodity researcher F.O. Licht GMbH in Ratzeburg, Germany. “Without it, you may have to close or at least temporarily idle plants.”
After importing a record 452 million gallons from Brazil a decade ago, the U.S. exported 5.7 percent of its production in 2015, which is more than triple the average rate in the years before 2011, government data show.
Brazil has become the No. 2 buyer of U.S. ethanol, after Canada. The Philippines, China, South Korea and India round out the list of top importers.