Higher Ethanol Production Could Use More Exports

After a COVID-19 slowdown in fuel demand, global energy prices have hit seven-year highs, and gasoline consumption is improving. 

Reuters says that means surging profit margins for ethanol producers and output levels at near-record highs. 

However, higher production without a corresponding increase in demand could mean growing stockpiles of the fuel. 

While that hasn’t been the case so far, an increase in lagging exports could bring balance to any extended output increases. 

Reuters says about 10 percent of all U.S. ethanol output gets exported every year, but trade has recently been a sore spot for ethanol. 

Shipments over the first eight months of 2021 totaled 796 million gallons, a 10 percent reduction from last year and the lowest for the period in five years. 

Two of the top customers for U.S. ethanol, Brazil and China, have been much less active recently. 

U.S. ethanol imports in Brazil grew more expensive than locally-produced ethanol because the free tariff-rate quota ended late in 2020. 

China was also expected to become a bigger importer of U.S. ethanol but hasn’t consistently imported larger amounts of the biofuel.

(Story Courtesy of NAFB News Service)