The U.S. ethanol industry is raising concerns over an uneven trade relationship with Brazil.
The U.S. Trade Representative’s Office launched an investigation into Brazil last week, and the ethanol industry will be part of that inquiry. While the U.S. imports sugarcane ethanol from Brazil, the Brazilian market places tariffs on American corn ethanol exports. Industry leaders say this lack of reciprocity is a fairness issue that needs addressing.
“We’ve had concerns about that mainly because Brazil has a tariff on U.S. ethanol, U.S. corn ethanol, going to Brazil, and we don’t have the same tariff in the U.S. And so, certainly, the Trump administration has been very engaged on this fairness issue,” said Chris Bliley, senior vice president of regulatory affairs at Growth Energy.
However, Bliley adds that it is not the only concern with Brazil’s sugarcane ethanol.
“I think one of the other concerns we have is that Brazilian sugarcane ethanol can get an advanced biofuel RIN where corn starch ethanol is not, and so that’s an issue that we’ve been working on as well. But we’re pleased to see that our Trade Representative and others in the administration are starting to address this fairness issue. And hopefully, we can return to parity between the two markets.”
Meanwhile, U.S. ethanol inventories have dropped to their lowest level in seven months. Stocks fell below 23.7 million barrels last week, despite a slight uptick in production. This tightening supply could affect fuel markets as demand holds steady.
Strong corn exports offer support, while soybeans and wheat remain weighed down by ample global supplies, according to the USDA’s latest WASDE report for February.
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