Future of Ethanol Exports

  • Tuesday, 10 September 2019 14:08

Successful Farming

September 9, 2019

By Jerry Perkins

Exports of U.S. ethanol could set another record this year, according to Mike Dwyer, chief economist for the U.S. Grains Council.

U.S. ethanol exports during the current marketing year that ends August 31, 2019, are on track to hit between 1.8 billion gallons and 2 billion gallons, Dwyer predicts. If achieved, that amount of ethanol exports would top the current record of 1.62 billion gallons set during the marketing year that ended August 31, 2018. During that 12-month period, U.S. ethanol was exported to 74 countries, according to the USDA’s Foreign Agricultural Service. 

The U.S. Grains Council and its ethanol export market development partners – the Renewable Fuels Association and Growth Energy – have set a goal of boosting U.S. ethanol exports to 4 billion gallons a year by 2022, Dwyer states. The Grains Council believes that by 2022, 75% of U.S. ethanol exports will go to six countries: China, India, Japan, Brazil, Canada, and Mexico. 

The U.S. Grains Council is a Washington, D.C.-based organization that promotes the exports of U.S. corn, sorghum, and barley and value-added products made from those commodities.

Dwyer says the Grain Council’s global strategy includes selling ethanol to China despite trade disputes between the U.S. and China that have roiled the markets there for U.S. crops and other products such as ethanol.

China currently imposes a 70% duty on U.S. ethanol, Dwyer says, but it will have to find a way to import foreign ethanol if it aims to fulfill the mandate it has imposed to use a blend of 10% ethanol and 90% gasoline (E10) by 2020. If trade issues between the U.S. and China are resolved, Dwyer says, ethanol imports by China in 2020 could hit between 300 million gallons and 1 billion gallons.

Kelly Nieuwenhuis, a farmer from Primghar, Iowa, who traveled to China last year on a U.S. Grains Council trade mission, says that he was told by Chinese gasoline retailers that they want to do business with the U.S. ethanol industry. The Chinese also expressed a desire to use more ethanol because it knows that will improve the air quality, Nieuwenhuis says.

Ron Lamberty, senior vice president and market development director for the American Coalition for Ethanol in Sioux Falls, South Dakota, has made seven trips to Mexico to advise the transportation fuels industry there on how it can integrate the use of E10 into Mexico’s fuel supply.

Mexico has made the use of E10 legal in the country, Lamberty says, however, a Reid vapor pressure (RVP) waiver or the use of a lower RVP blendstock would be required for E10 to be used in the nation’s three largest cities: Mexico City, Guadalajara, and Monterrey. Small quantities of ethanol are currently being sold in Mexican cities on the U.S.-Mexico border, Lamberty says.

Lamberty has participated in technical workshops on ethanol that have been held for Mexico’s petroleum equipment installers and retailers. The workshops were a joint effort of the U.S. Grains Council and the Mexican Association of Petroleum Equipment Suppliers, and they were intended to inform Mexican fuel marketers about sourcing, blending, distributing, and retailing ethanol-blended gasoline.

Mexico’s potential annual use of E10 totals 1.2 billion gallons, Lamberty says.

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