Lax trade restrictions and high sugar prices should allow the U.S. to double ethanol exports from Brazil in the second half of 2011, the U.S. Energy Information Administration said Wednesday.
In the first five months of 2011 exports of U.S. ethanol is more than double the same period last year, the EIA said.
"The remaining 2011, is likely to surpass the United States, Brazil is the world's largest exporter of ethanol, because of food shortages, and recently, as a result of high sugar prices in Brazil," said the EIA weekly petroleum report.
With corn ethanol in the United States relatively cheaper, ethanol producers in the United States was able to supply the markets that were previously imported Brazilian ethanol.
U.S. producers also benefited from Brazil to eliminate its import tariffs by 20 percent through 2011 and lower European rates of ethanol mixed with gasoline.
Looking for last year, U.S. federal and state policy can lead to imports of Brazilian ethanol from sugar cane, the EIA said.
California Low Carbon Fuel Standard would exercise a value much lower CO of ethanol from sugar cane than corn ethanol, giving refiners an incentive to use more fuel in Brazil.
The mandate federal renewable fuel ethanol also classifies sugarcane as advanced biofuel. With cellulosic ethanol, advanced biofuels otherwise, are unlikely to achieve the federal government in the near future, Brazilian ethanol could fill this gap, the EIA.
"In this context, it is hard to imagine a scenario in which the U.S. continues to export corn-based ethanol in Brazil, while at the same time imports of ethanol from sugarcane in Brazil and meet LCFS federal RFS requirements, "the EIA said.
Another factor affecting the trade of ethanol in the United States is with the capacity of the domestic market to consume more ethanol blends with gasoline.
While the EPA has increased the maximum mixing ratio of gasoline to 15 percent from 10 percent in vehicles built since 2000 have logistical and legal obstacles prevented widespread sales.
Sales of E85, a blend of 85 percent ethanol and 15 percent gasoline, was also delayed due to a limited number of flex-fuel vehicles and a limited availability of E85 fuel pumps .
If these mixtures are able to overcome these obstacles, E15 will be "likely to be economically attractive market for domestic producers of ethanol," said the EIA.
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