US tops world ethanol exports charts in 2016

In 2016, the US was again the world’s largest net exporter of ethanol, according to US Department of Agriculture (USDA) trade data.

Net exports are calculated as the difference between exports and imports, and the 2016 calendar year concluded with US net exports at 838 million gallons, the second highest level ever, exceeded only in 2011.

US ethanol shipments exceeded 1 billion gallons, and incoming shipments totalled nearly 215 million gallons in 2016. 

For the majority of the 2000s, Brazil was the largest net exporter of ethanol in the world, and the US was among the world’s largest net importers, but the trend reversed in 2010 when the US started as a net exporter, shipping out more than 410 million gallons and importing more than 131 million gallons that year.

By 2011, US exports rose so sharply, by more than 1.2 billion gallons, that the US seized the top world net exporter slot from Brazil.

However, the drought in the 2012/2013 marketing year decreased the competitiveness of US ethanol in global markets, cutting global exports.

In 2014, US net ethanol exports rebounded and once again exceeded Brazil’s net exports, this time by 166 million gallons. 

Today, the US is both a major ethanol exporter and one of the world’s largest importers.

Roughly 85% of US ethanol imports originate from Brazil, with most imports entering the country through the Gulf ports (largely Houston-Galveston) and West Coast ports (California). 

Brazilian ethanol imported into Houston-Galveston is processed into ETBE (a fuel oxygenate) and then re-exported to Japan to meet its strict greenhouse gas criteria, which favours Brazilian ethanol over US ethanol.

The importation of Brazilian ethanol into California is driven by the state’s Low Carbon Fuel Standard (LCFS), which favours sugarcane ethanol over Midwest corn ethanol, based on California’s calculation of carbon intensity.

This year, however, the US has imported very little Brazilian ethanol due to the much lower price for US corn ethanol relative to Brazilian ethanol. 

Conversely, US ethanol exports to Brazil have increased substantially due to the price disparity relative to competitively-priced corn ethanol.

The relatively high price of sugar compared to ethanol has redirected Brazilian sugarcane into sugar production rather than ethanol, and as a result, Brazil has increased its imports of price-competitive US ethanol to meet growing fuel ethanol demand, a trend expected to continue through much of 2017.