Ethanol Exports Start 2014 Higher

Exports of U.S. ethanol started 2014 at the highest level seen in over two years.

rfa-annAccording to U.S. Census Bureau data, ethanol exports in January totaled 86 million gallons, which is the highest monthly volume since December 2011. “Exports were up a third from December 2013, while imports remained sparse, meaning the United States was a net ethanol exporter by the widest margin in over two years,” according to Renewable Fuels Association research analyst Ann Lewis, writing on the E-xchange blog.

Brazil was the top customer for U.S. ethanol, beating out Canada for the number one spot, importing nearly 23.9 million gallons, the largest monthly volume to Brazil in two years. Exports to Canada dropped 36% from December to 18.8 million gallons (mg). Rounding out the top destinations were the United Arab Emirates (12.4 mg), India (10.7 mg), the Philippines (5.5 mg), and Mexico (3.3 mg).

Meanwhile, exports of the ethanol co-product distillers dried grains (DDGs) were lower in January, down 9% to 903,827 metric tons (mt). Lewis notes that China was again the leading destination with 344,147 mt. “However, China’s market share scaled back to 38%, in contrast with its majority stake (56%) of U.S. DDGs exports averaged over the second half of 2013,” writes Lewis. Mexico (140,664 mt), South Korea (77,977 mt), Vietnam (48,514 mt), and Japan (44,505 mt) rounded out the top five DDGS markets in January.

Analysis: Export Market a Bright Spot for US Ethanol

Ethanol producers might be fretting about the government’s proposal to lower the amount of the green fuel to be mixed into the Nation’s fuel supply. But this analysis from the University of Illinois points out that those Renewable Fuel Standard (RFS) numbers don’t matter when it comes to ethanol going over the border and to foreign shores, a bright spot for the American industry.

An important point to note is that ethanol or other biofuels produced in the US and exported for consumption overseas do not count toward the blenders’ RFS obligations. The Renewable Identification Numbers (RINs) associated with exported biofuels are retired and no longer eligible for use towards RFS compliance. Thus, exports are not substituted for domestic consumption but rather represent additional demand. Ultimately, exports provide a path around, rather than through, the ethanol blend wall by allowing the domestic industry to produce greater volumes of ethanol than the blend wall limitation implies for domestic use.
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The analysis goes on to look at markets for American ethanol in Brazil, Canada, the European Union, Mexico and other foreign consumers and how it could take up the amount proposed to be lowered in the RFS.

Ethanol Exports Important to Industry

nec14-patriot-juddExports of both ethanol and the animal feed co-product distillers dried grains (DDGs) are important for Patriot Renewable Fuels, located near the Quad Cities and not far from Chicago.

Patriot commodity manager Judd Hulting attended a trade mission with the U.S. Department of Commerce and the Renewable Fuels Association (RFA) to Brazil last fall. “It’s just another outlet for our 200 or so investors,” he says. “We are actually close to 100% dependent on the export market for our distillers grains so branching out both in the ethanol and the DDG market is very important for our profitability going ahead.” Interview with Judd Hulting, Patriot Renewable Fuels

nec14-hubbardRFA General Counsel Ed Hubbard led that mission to Brazil last fall and talked about it during a panel at the National Ethanol Conference on Expanding the Global Marketplace for U.S. Ethanol.

“We had a very successful mission opening new business for individuals that participated,” said Hubbard. “We are the global leader in ethanol production, producing 57% of the world’s output.”

Hubbard noted that U.S. ethanol exports surged to 82.4 million gallons in November, with large volumes finding their way into new or emerging markets such as China and India, as well as the Philippines, Tunisia, Panama, and Mexico. Ethanol exports totaled 621.5 million gallons in 2013, the third-highest annual total on record. Comments from RFA General Counsel Ed Hubbard

Also on the export panel were:

Eco-Energy CEO Chad Martin – Comments from Chad Martin, Eco-Energy
DATAGRO Consulting president Plinio Nastari – Comments from Plinio Nastari, DATAGRO
U.S. Department of Commerce trade specialist Cora Dickson – Comments from Cora Dickson, US Commerce Dept.

2014 National Ethanol Conference Photo Album

NEC Coverage sponsored by Patriot Renewable Fuels LLC

NEC Global Ethanol Conversation

nec14-globalIt is always interesting to hear the perspectives of different countries during the National Ethanol Conference global panel and to see the similarities as well as differences in viewpoint.

The panel was moderated by Bliss Baker, Global Renewable Fuels Alliance, and included Renewable Fuels Association president Bob Dinneen, as well as (from left to right): Joel Velasco, Senior Advisor to Board of UNICA; Scott Thurlow, President, Canadian Renewable Fuels Association; Jayant Godbole, President and Director PRAJ Americas, Inc.; and Robert Vierhout, Secretary-General, ePURE

nec14-epureA few years ago, it was Brazil and the United States sparring with each other over ethanol trade and tariffs, but now it is the Europeans who are challenging the U.S. ethanol industry in the export arena.

“The real loser in the EU’s nonsensical action is the European consumer, who is being denied access to low cost high performance renewable fuels,” Dinneen said in his state of the industry address. Vierhout challenged that assertion on the panel. “Bob, please wake up,” said Vierhout. “If you would export your ethanol to Europe, who’s going to gain? Not the consumer, it’s the oil companies.”

Even Brazil and Canada fired back at Vierhout over Europe’s policy. “I’ll summarize for Rob,” said Velasco. “He’s never met a gallon, or a liter, or hectoliter, of ethanol imports that he likes.”

Thurlow questioned how this would play in the current European-U.S. trade negotiations. “I don’t see how your position can be tenable, Rob, if you are going to have a dispute resolution mechanism that will basically make it impossible for these types of ‘snap-back tariffs’ to be put on,” he said. To which Vierhout replied, “There’s still a possibility (the trade agreement) will exclude ethanol.”

Listen to the conversation here and watch the European exchange on video below: Growing Global Ethanol Industry Panel Discussion

2014 National Ethanol Conference Photo Album

NEC Coverage sponsored by Patriot Renewable Fuels LLC

Distilers Grains Exports Record High in 2013

Patriot Renewable Fuels DDGsU.S. exports of the ethanol co-product distillers grains set a new record last year and exports of ethanol were lower but still strong.

According to the latest government statistics, exports of distillers dried grains with solubles (DDGS) totaled a record 9.7 million metric tons (mmt) last year, up 31% from 2012 and well above the previous record of 9.0 mmt set in 2010. China was the leading destination for U.S. distillers grains, taking 46% of the total, with Mexico and Canada a distant second and third.

ethanol-tankerU.S. exports of ethanol totaled 621.5 million gallons in 2013, down from the previous year but still the third-highest annual total on record. Canada was by far the leading export market for the year, receiving 52% of the total. The Philippines ranked second, followed by Brazil, the United Arab Emirates, and Mexico. Meanwhile, U.S. ethanol imports were down 27% from 2012, making the United States a net exporter of 226.3 mg in 2013, roughly a 24% increase over 2012 net exports.

“U.S. produced ethanol is the world’s lowest cost liquid transportation fuel. As such, we anticipate that export opportunities will continue to grow as countries across the globe recognize the air quality, high octane and superior performance of renewable ethanol,” said Bob Dinneen, President and CEO of the Renewable Fuels Association.

Export Exchange 2014 Heads to Seattle, WA

Export Exchange 2014 is heading to Seattle, Washington and will take place on October 20-22, 2014 at the Sheraton Seattle Hotel. The event is sponsored by the Renewable Fuels Association (RFA) and the U.S. Grains Council (USGC). Held every two years the Export Exchange is a premier international trade conference focused on the export of U.S. coarse grains and co-products. Last year’s event attracted buying teams from 33 countries, including all of the top U.S. international markets.

In 2014, approximately 150 foreign buyers of U.S. coarse grains and co-products are expected in Seattle, on hand to meet and build relationships with more than 300 domestic suppliers in attendance. There will also be more than two days of educational sessions and networking opportunities.

2014 Export Exchange logo.jpgExport Exchange 2012 exceeded all expectations,” said USGC Chairman Julius Schaaf, “and many of our foreign guests have already expressed their intent to return in 2014. Buyers will converge in Seattle next October, ready to make contacts and do business. U.S. grains sellers and ethanol producers can expect to rub shoulders with more than 80 percent of the world’s top buyers at Export Exchange. Key stakeholders will surely benefit from attending. We’re really looking forward to this event.”

Export Exchange focuses on bringing international buyers of U.S. coarse grains and distiller’s dried grains with solubles together with U.S. producers and agribusiness professionals. Attendees will also have the opportunity to participate in pre- and post-conference missions to view the U.S. production and export complex and learn more about the capacity, reliability and quality of the United States as a long-term supplier.

“There is an increased global demand for DDGS (distiller’s dried grains with solubles) and Export Exchange connects the dots by bringing interested buyers and sellers together to help grow the international market,” added Bob Dinneen, President and CEO of RFA.

USTR Nominee Answers EU Ethanol Export Question

fromanThe issue of the European Union’s treatment of ethanol imports from the United States came up during a Senate Finance Committee nomination hearing Thursday for U.S. Trade Representative (USTR) nominee Michael Froman.

Sen. John Thune (R-SD) noted that he and a number of other senators sent a letter in April to the Acting USTR asking for an investigation into the anti-dumping decision made by European Union regarding ethanol imports from the United States. “American ethanol producers believe that what the EU has done in imposing a countrywide anti-dumping duty on all U.S. ethanol imports is both unprecedented and unsupported from a legal standpoint,” Senator Thune said.

Forman answered in the affirmative when the senator asked him if he would commit to “carefully reviewing the EU’s action on ethanol” and pursue “every available remedy to ensure that U.S. ethanol exporters are treated fairly by the EU.”

The nominee said he was familiar with the issue and that his understanding is that “USTR is reviewing the methodology that the EU used in that case.”

Froman currently serves as the White House deputy national security advisor for international economic affairs.

Groups Seek to End EU Duty on US Ethanol

The Renewable Fuels Association (RFA) and Growth Energy have filed a complaint with the General Court in Luxembourg challenging the European Union’s (EU) decision to impose a 9.6 percent antidumping duty on all ethanol imported from the United States.

Growth_Energy_logo-1The complaint outlines 10 specific violations of one established trade law committed by the European Commission in its investigation of anti-dumping claims, and the imposition of a country-wide anti-dumping penalty, against all U.S. ethanol. These include errors in the assessment of relevant facts in determining injury and dumping margins as well as violations of the EU’s own rules regarding the implementation of anti-dumping penalties, such as their refusal to calculate individual dumping margins and assign individual dumping duties, their incomplete and inaccurate calculation of an alleged injury margin, and their overstatement of the volume of imports from the U.S. The complaint from RFA and Growth Energy requests the complete and total end of the duty.

RFA-logo-13The RFA and Growth Energy are trying to remedy the situation through other avenues as well. EU’s determination to impose the duty violates various requirements put in place by the World Trade Organization (WTO). Consequently, RFA and Growth Energy are working with appropriate officials in the United States to pursue a challenge before the WTO.

Earlier this month, 14 Senators signed a bipartisan letter to Acting Commerce Secretary Rebecca Blank and Acting US Trade Representative Demetrios Marantis demanding that the Administration carefully evaluate the EU’s decision to impose a duty on imported ethanol and consider challenging the WTO requirements.

Senators Urge Probe in EU Ethanol Duty Decision

A bipartisan group of senators are asking for an investigation into a recent anti-dumping decision made by European Union regarding ethanol imports from the United States.

wtoFourteen Democratic and Republican Senators have joined together to sign a letter sent to the Acting United States Trade Representative (USTR), Demetrios Manatos and Acting Secretary of Commerce, Rebecca Blank, calling on them to review and consider a World Trade Organization (WTO) challenge to the European Union’s controversial and unprecedented anti-dumping duty recently imposed on U.S. ethanol producers.

The letter was co-authored by Senators John Thune (R-SD) and Amy Klobuchar (D-MN), and cosponsored by Senators Tom Harkin (D-IA), Chuck Grassley (R-IA), Al Franken (D-MN), Mike Johanns (R-NE), Heidi Heitkamp (D-ND), Deb Fischer (R-NE), Tim Johnson (D-SD), John Hoeven (R-ND), Claire McCaskill (D-MO), Pat Roberts (R-KS), Richard Durbin (D-IL) and Roy Blunt (R-MO).

In a joint statement, Renewable Fuels Association CEO Bob Dinneen and Growth Energy CEO Tom Buis said they are pleased to see the senators take action in the matter.

“The EU Commission failed to make any particular finding of dumping by any producer or marketer investigated in connection with the case,” said Dinneen and Buis. “The EU’s recent actions are unprecedented and we believe that the World Trade Organization (WTO) will nullify this blatantly protectionist country-wide anti-dumping duty on exports of ethanol from the United States.”

Read more here.

EC Proposes Duties on Imported Ethanol

Following an investigation that concluded U.S. exporters sell ethanol to Europe at illegally low prices after receiving subsidies, The European Commission (EC) has proposed a rare duty on all U.S. producers of ethanol. In response, the U.S. Trade Representative’s office expressed its disappointment in the EC proposal, seeking anti-dumping duties of 9.5 percent on American ethanol. The EC distributed a proposal to member states with a request that the regulation is adopted by February 22, 2013.

Ethanol ExportsThe American ethanol industry has been vocal on the issue and the Renewable Fuels Association (RFA) and Growth Energy, jointly released a statement. “America’s producers and marketers of ethanol are outraged by the news that the European Commission has proposed to the European Council an anti-dumping duty equivalent to 62.3 Euro per tonne on all ethanol produced in the United States, regardless of who produces the product or who sells it. This decision is unprecedented. Not only does it fly in the face of over 30 years of consistent practice by the EC, but it also violates numerous provisions of the World Trade Organization’s Agreement on Antidumping.”

Bob Dinneen, president of RFA added, “This proposal is legally vulnerable on numerous grounds. They selected six producers for investigation and none were found to be dumping; nonetheless, duties are being imposed. In addition, all those producers not selected for review are also being penalized, again with no dumping having been found.”

“We are exploring every option to overturn this decision. Our producers and trading companies cooperated fully with the Commission’s requests for information. In the end, it was all ignored in favor of what can only be described as a political decision to erect an artificial trade barrier,” concluded Growth Energy CEO Tom Buis.

According to an article in Reuters, shipments of ethanol from the United States to the EU are worth more than $930 million, or 700 million euros, a year.

European Committee Proposes US Ethanol Tax

rfa-logo-09The Antidumping Advisory Committee, composed of representatives from member states of the European Union, has reportedly endorsed a 9.6 percent penalty on U.S. ethanol exports to Europe.

In response to the announcement, a joint Growth_Energy_logo (1)statement was released by Growth Energy and the Renewable Fuels Association.

“This is simply one step in an ongoing process. While the Antidumping Advisory Committee has voted in favor of imposing an anti-subsidy duty on U.S. ethanol exports, this is one committee making a recommendation to a larger body and the matter is not final. While we are troubled by the Commission’s preliminary decision, we remain convinced that this matter lacks the merit necessary for imposing such a duty and that, when all the facts are considered, the European Union will rightly decide not to impose any antidumping duties on imports of ethanol produced in the United States.”

Ethanol Groups Respond to EU Investigation

The European Commission today issued a “general disclosure document” setting forth its proposed ruling in the anti-dumping investigation involving U.S. ethanol exports to Europe.

Growth Energy and the Renewable Fuels Association (RFA) issued a joint statement on the issue:

“We continue to cooperate with the Commission’s investigation. We are troubled by news that the Commission is recommending a 9.6 percent anti-dumping duty to its Member States. We remain convinced that if all the facts are considered, the European Union will decide not to impose any anti-dumping duties on imports of ethanol produced in the United States.”

Last year, the European Union (EU) initiated anti-dumping and countervailing duty investigations regarding U.S. exports of ethanol to Europe and current U.S. policies surrounding ethanol production and use, specifically the expiring volumetric ethanol excise tax credit, or VEETC, available to blenders of ethanol and gasoline. Allegations by EU ethanol producers suggested that U.S. ethanol exports to Europe were taking advantage of the tax incentive before export, thus lowering its price and harming EU ethanol producers. However, by August of this year it appeared the issue had been resolved and the EU would not be taking any action.

RFA Calls for Removal of Trade Distorting Policies

The Renewable Fuels Association (RFA) is calling on the Obama Administration to help remove certain trade distorting policies in Brazil that they say have contributed to the dramatic decline in exports of ethanol to Brazil. The organization’s President and CEO, Bob Dinneen, sent a letter to US Trade Ambassador Ron Kirk asking for assistance on the matter.

The letter seeks assistance from the USTR in convincing Brazil to reverse its decision to reduce blend volumes from 25 percent to 18 percent, and remove a tariff imposed by the state of Sao Paulo that is discriminating against a vast majority of exports to Brazil. While imports of ethanol from Brazil continue to flow into the U.S. at the rate of about 50 – 60 million gallons per month with the help of the RFS, exports to Brazil have been reduced significantly as a result of these trade barriers.

Most analysts expect the U.S. to export just 650-750 million gallons for the entire year, with only about 10-15 percent of the ethanol going to Brazil.

Click here to read the letter in its entirety.

Internationalists Share Views On US Competitiveness

During the recent 2012 Export Exchange a few key leaders in the international market took the stage in a panel to share their perception on United States competitiveness in grain production.

Adel Yusupov, Southeast Asia Regional Director for US Grains Council, served as the moderator for the panel.

Panelists consisted of:
Willis Wu-Yeh Cheng, Chairman, Charoen Pokphand (Taiwan)
Mousa Wakila, General Manager, National Poultry Al Ahlieh (Jordan)
Jamie Rueda, General Manager, Escala (Colombia)
Dennis Inman, Vice President & Commercial Lead, Cargill, Inc.

The panelists were asked to share their candid thoughts on how the United States ranks in grain production and what attributes are most important to them when buying grain. Prices were at the top of all their lists, but they also want reliable market research and stressed that logistics were always a concern. Other items on the list included: consistency, a strong relationship and predictability.

Listen to the International Panel’s presentation here: International Panel at Export Exchange

You can find photos from this years Export Exchange here: 2012 Export Exchange

Outlook For The Supply & Demand Of DDGS

Distiller grain production was a hot topic discussed throughout the 2012 Export Exchange. Dr. Bob Wisner, Agriculture Extension Economics at Iowa State University, shared his research on the future of DDGS and what we can expect in the coming years. He also spoke on how this years drought affected DDGS production and it’s long-term affect on our US supply.

“The biofuel industry has expanded extremely rapidly in the last six years. It has become a major feed ingredient domestically and in the international market. Here in the United States it’s marketed in several different forms. We have dried distiller grains, that are dried to 10% moisture. We have a modified distiller grain that is partially dried. We have a wet distiller grain that is especially useful in the beef feeding industry. It gives a higher feed conversion efficiency versus corn than dry distiller grains. We have quite the combination of alternative uses here in the United States that for those of you outside the US are not generally available.”

“This is the first year in the last 17 years that we have seen a significant decline in distiller grain production. That of course is being driven by the severe drought here in the United States.”

In conclusion, Dr. Wisner shared these major things that will determine the supply and demand of DDGS.

  • DDGS production follows ethanol production level and corn cost.
  • Prices as % of corn/sbm price higher than in the past: 105%-108% of corn this winter.
  • Prices for all feeds including DDGS will be extremely sensitive to South American weather in the next 4 months.
  • After the current marketing year, with a return to more normal US crop yields, DDGS supplies will likely resume a longer-term uptrend, but at a slower rate than in the last six years.
  • Risk of US domestic DDGS market saturation is low.
  • DDGS exports likely will be growing competitor with the domestic feed industry.
  • Longer-term future production and use depends heavily on policy issues and fuel prices.
  • Important emerging issue: Will oil removal from DGS impact the value by species?

Listen to Dr. Bob Wisner’s complete presentation here: Dr. Wisner at Export Exchange

You can find photos from this years Export Exchange here: 2012 Export Exchange