FO Licht: Brazil ethanol exports could decline in '05

22 March 2005 23:10  [Source: ICIS news]

SAO PAULO (CNI)--Brazilian ethanol exports could decline in 2005 as a result of increased ethanol production in the US, Brazil's number one export market, according to a recent report issued by sugar and ethanol consulting group FO Licht.

 

US ethanol production is expected to reach as much as 14.5 bn litres of ethanol in 2005.  With the increased production, the US could have as much as 1bn litres in excess ethanol, which it could export, according to FO Licht.

 

With lower demand in the US, FO Licht said it expects Brazilian exports to decline to 1.4bn litres in 2005 from 2.4bn litres in 2004. 

 

Brazil estimates that its ethanol exports will remain on par with last years exports.

 

However, Brazil is unlikely to export any ethanol directly to the US in 2005.  Rather, the lion's share will be exported via the Caribbean, using the Caribbean Basin Initiative (CBI), which allows ethanol to enter the US tariff-free.

 

FO Licht said it expects worldwide ethanol production to continue to grow in coming years, prompted in large part by massive investments in the US and Brazil.

 

By 2008, FO Licht said it expects there to be roughly 3.5 bn-4 bn litres in excess ethanol production.

 

Nonetheless, other analysts say they believe that demand for ethanol could continue to rise in coming years, especially as Asian nations, including Japan, China and South Korea.

 

Likewise, a bipartisan coalition of 21 US senators recently proposed a bill that would increase US ethanol demand to more than 30 bn litres by 2012.

 

Brazil is the world’s largest ethanol producer.

By: Elizabeth Johnson
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