December 5, 2012, Piura, PE — There may be a glut of ethanol in 2013, resulting in a corresponding drop in price for the biofuel, as crop yields for feedstock return to normal levels, according to Mike Dwyer, director of the foreign agriculture service at the US Department of Agriculture (USDA).
December 5, 2012 By Argus Media
The US corn yield and Brazilian sugarcane yields are forecast to return to normal levels next year after several years of declines.
The US will remain the largest ethanol producer and exporter, Dwyer told an audience at the F O Licht Ethanol Latin America conference.
“The United States has the potential to return with force in the export market in 2013-14,” he said.
But going forward, Dwyer said he expects Brazil has the best conditions to dominate the market.
“Brazil is the largest natural exporter of ethanol. It has the technology, know-how and feedstock,” he said.
According to USDA forecasts, US production of ethanol will rise nearly 10pc from 52bn l/yr (896,000 b/d) in 2011 to 57bn l/yr (982,000 b/d) in 2022, while Brazil should more than double from 23bn l/yr (396,000 b/d) in 2011 to 47bn l/yr (810,000 b/d) in 2022.
Dwyer cautioned this positive scenario will depend largely on decisions by the Brazilian government, adding it needs to set and stick to a blend mandate and import ethanol if necessary to meet domestic demand, while curbing subsidies on traditional fuels.
“It would send a strong signal to the market if the Brazilian government would set its blend mandate at 25pc. It is bad policy decision to reduce the mandate, because it keeps investors from considering the market,” he said.
Analysts expect Brazilian President Dilma Rousseff's administration to make important moves in the sector next year, including restoring the blend mandate back to 25pc.
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