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U.S. Ethanol Exporters Facing Competition in North Brazil
USAgNet - 03/18/2019

United States ethanol exporters are likely to face increased competition in one of the few foreign markets where they have been able to deliver large volumes in recent years, the North and Northeast regions of Brazil, an industry association chief said.

According to Reuters, that competition would come in the form of corn-based ethanol common in the United States, not sugar-based ethanol that has traditionally dominated in Brazil. Corn ethanol is taking off in Brazil's grain heartland of Mato Grosso state, where production is expected to grow more than 50 percent in 2019 from a year earlier.

But one major obstacle for that to happen is logistics. Mato Grosso corn-ethanol producers are waiting for completion of a key road linking the center-west region to a river port in Miritituba, Para state, from where barges would take the ethanol to fuel distributors in North and Northeast Brazil.

"We produce the cheapest corn ethanol in the world in Mato Grosso. When we have that road ready, I'm sure we would be able to compete with U.S. suppliers," said Ricardo Tomczyk, head of Brazil's association of corn ethanol producers (UNAM), on Thursday.

Brazil is the top destination for U.S. ethanol. Exports to the country in 2018 reached 499 million gallons out of total exports of 1.37 billion gallons.

That fuel is delivered mostly to ports in the Northeast to supply states such as Pernambuco and Ceará. Some vessels also deliver the fuel to Maranhão, in the North.

Tomczyk said those markets have large potential for expansion. Some service stations in north Brazil do not even have ethanol pumps alongside the gasoline ones, unlike what is seen in the rest of the country.


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