October 12, 2009
Brazil's corn-ethanol imports from US downplayed
Brazilian ethanol industry participants this week downplayed rumours that Brazil, the world's largest exporter of sugarcane-based ethanol, could import corn-based ethanol from the US.
"It is possible [ethanol] imports could start, but the likelihood is slim," Tarcilo Rodrigues, director of sugarcane milling group Bioagencia, told Dow Jones Newswires.
Rodrigues said, for instance, ethanol imports from the US face hurdles such as imports tariffs, freight costs, storage costs that push the imported ethanol price to around 1.23 Brazilian real (70 US cents) per litre in Brazil.
As a result, imports at current exchange rates aren't feasible as domestic costs hover just above BRL1 per liter, he said.
An official at Brazil's Sugarcane Industry Association, or Unica, also downplayed the likelihood of Brazil importing ethanol. "No corn ethanol has been brought in so far, and no orders were placed or deliveries made," the official said.
Brazilian ethanol prices are strengthening as stocks become tighter due to the weather hampering the crush and more attractive prices for sugar leading to more cane being transformed into sweetener.
Moreover, Brazil's growing fleet of flex-fuel cars, which can switch between gasoline and ethanol, ensure an accelerating market for the alternative fuel.
As a result, a broker at Uniao Corretora in Sao Paulo said that Brazilian-based companies are assessing the possibilities of importing US corn-based ethanol.
The strengthening Brazilian real against the dollar has made importing ethanol from the US more attractive, the broker said. One dollar is at 1.74 Brazilian reals on Friday.
Bruno Zaneti, an analyst at FCStone in Campinas, agreed that as the supply tightens during the inter-harvest period, this will make imports of ethanol more feasible.
"This period will be tough [to buy ethanol in Brazil] as stocks will be low and purchases are high," he said. Imports could be an option, he said.
Brazil's center-south sugarcane inter-harvest runs from December through around March or April.
Brazil is the world's No.1 exporter of sugarcane-base ethanol.
