Iowa Corn Feeds Brazil’s Fuel Tanks as Demand Spurs Import Surge

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April 5, 2016

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by Mario Parker (Bloomberg) Sao Paolo ethanol now 39% more expensive than fuel from Iowa;
American glut also spurs exports to China, Philippines, India —

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.

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.

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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.

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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. READ MORE

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