More Volume, More Places

The February issue of Ethanol Producer Magazine has an exports theme and includes stories about trade missions overseas to build global markets for U.S. ethanol as well as the biggest export markets for U.S. DDGS and ethanol, writes Tom Bryan.
By Tom Bryan | January 21, 2015

There are a lot drivers behind today’s robust ethanol and distillers grains exports, but the abundance of cheap U.S. corn tops the list.  Inexpensive corn, after all, yields competitively priced ethanol that easily competes in a global market hungry for octane and renewables. And because distillers grains is frequently shipped in combination cargos that include corn, ethanol’s principal coproduct often enjoys ride-along sales when corn is sold overseas.

In our cover story, “Opening Channels for Export,” we learn that America’s last two corn harvests—both huge—played into the U.S. Grains Council’s decision to pursue federal funding and authorization to promote biofuels exports. EPM Senior Editor Susanne Retka Schill explains how and why the USGC teamed up in 2014 with the Renewable Fuels Association, Growth Energy and the USDA Foreign Agriculture Service to build global markets for U.S. ethanol. The landmark effort just got under way and it began with trips to Japan, South Korea, Panama, Peru, Singapore and Philippines.

In fact, Southeast Asia, writ large, is showing tremendous potential as a destination for U.S. ethanol exports, which are projected to top 800 million gallons in 2014 and could reach 1 billion gallons next year. In our feature, “Regaining Ground,” EPM Managing Editor Holly Jessen reports that Canada and Brazil remain the top takers of U.S. ethanol, but unlikely customers like United Arab Emirates and Peru, which sells ethanol into the EU, have significantly boosted their purchasing. Notably, ethanol producers that export, like Illinois-based Patriot Renewable Fuels LLC, seem to share an understanding that exporting ethanol isn’t just a discretionary, side market of their primary product, but a critical outlet for the industry as a whole.

Our feature on distillers grains exports, “Beyond Boats to China,” gauges the reactions of American traders following China’s late-2014 acceptance of MIR 162, the genetically modified corn trait at the center of the country’s temporary pseudo ban on DDGS last year. Coming off a record 10 million metric-ton-exports year, DDGS marketers say it is great news that China is poised to buy the industry’s main coproduct again, but they’re also calling out their top foreign customer for being unreliable. Trust issues aside, the end of China’s DDGS timeout means the global market for the product is bullish once more, and prices reflect it.

No doubt about it, China’s renewed acceptance of DDGS represents a rebound for the product's global market, but exporters are applying a disciplined approach to this vast opportunity. Simply put, marketers don’t want to get stung by China again, and many of them now refuse to blindly overserve the world’s top DDGS importer at the expense of steady foreign and domestic buyers. 

Author: Tom Bryan
President & Editor in Chief