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Mood Changes In Brazil Ethanol Mkt On US Senate Move
By Mr Ethanol | December 18, 2007
CattleNetwork:
Brazil’s ethanol market might have the U.S. government to thank once again for snapping the sector back to life, analysts and traders said Monday.
The U.S. Senate approved on Thursday a major energy bill that requires 36 billion gallons, or 136 billion liters, of automobile fuel to be made from renewable sources. The best part of the bill, according to Tarcilo Rodrigues, an ethanol market analyst at Bioagencia in Sao Paulo, is that only 15 million gallons, or 57 billion liters, can be made from corn ethanol. The rest has to come from alternative sources, from new cellulosic technologies still in the works, to sugarcane.
“This is very good news for Brazil and will change the market for ethanol in the U.S.,” said Rodrigues.
A few weeks ago, Brazil ethanol sector investors said that the export market for Brazilian ethanol was dependent on Washington mandating an increase of ethanol use in gasoline. That day has come and Brazilian ethanol producers are expecting more exports to the U.S. in 2008, after months of that market being closed off to Brazil because of excess ethanol supply up north.
“I definitely expect to see exports returning to the U.S. next year,” said Eduardo Correa, a sales director at Equipav Milling Group, a sugarcane milling company that produces both sugar and ethanol.
“The situation has definitely changed on this news,” said Antonio Augusto Duva, soft commodities manager at BNP Paribas bank.
The bill still has to be ratified by the House of Representatives, which is expected before Christmas.
“What matters in this market is supply, because once you have the supply the government will come in and mandate ways to use it,” Correa said.
“What has just been confirmed once again in the Senate decision is the notion that investing in ethanol is good business. Ethanol is fast becoming part of the world energy mix,” Correa said.
Brazil is the world’s leading ethanol exporter and lowest cost ethanol producer. Ethanol in Brazil is made from sugarcane.
Topics: Brazil, Ethanol, Legislative, News |
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