Welcome to SJGLE.com! |Register for free|log in
Welcome to SJGLE.com! |Register for free|log in
Related Searches: Tea Vitamin Nutrients Ingredients paper cup packing
The processing plants peppering the agricultural heartland of Brazil attest to the country’s position as the world’s biggest sugar-cane producer and the undisputed king of ethanol made from the crop. But debt has crippled the industry, paving the way for another biofuel to flourish.
Brazil’s production of corn-based ethanol is set to exceed the 1-billion liter mark for the first time ever this season, according to INTL FCstone. While that’s still just a small fraction of the South American nation’s 31-billion liter biofuel market, output is on track to expand quickly in the next few years amid an investment spree with more than a dozen new plants being planned.
The drive into corn comes after farmers tripled output of the grain in Brazil’s Central-West savannas over the past decade. That’s providing agricultural processors including Cargill Inc. with abundant supplies of the ethanol-making ingredient at a time when prices for fossil fuels in Brazil have jumped to multi-year highs. New legislation — the so-called Renovabio — has also set federal mandates for higher levels of biofuel use. That’s expected to boost domestic demand by 20 billion liters through the end of the next decade, according to government projections.
The foray into corn could also mean increased competition for the American ethanol industry, which makes most its biofuel from the grain. Brazil is the world’s largest ethanol consumer after the U.S., largely because of the wide use of cars that can run on either the biofuel or conventional gasoline. While most of the South American nation’s needs are met with domestic production, it does take in some imports, mostly from the U.S.
Average ethanol prices in Brazil have fallen 9 percent this year to their lowest since October, according to the National Oil Agency. In contrast, gasoline prices have gained 8.3 percent.
‘Cheapest Corn’
Brazil’s “corn-ethanol producers have become very competitive,” said Ricardo Tomczyk, the head of industry group Unem. Prices for the grain in Mato Grosso state, in the heart of the region wher the new plants are being developed, have averaged $1.87 a bushel this year. That’s well below the $3.30 average in key U.S. corn grower Iowa — a reflection of different production and logistics costs. “We have the cheapest corn in the world,” Tomczyk said.
Corn-ethanol output could top 3 billion liters in five years and has the potential to reach 8 billion liters by 2030, Tomczyk estimates. That would be enough for the fledgling industry to grab about 40 percent of the projected increase for domestic demand over the period, government data show.
Corn-based ethanol will likely be primarily shipped to Brazil’s center and northern states, typical destinations for U.S. exports, Tomczyk said. Brazil imported 1.7 billion liters of U.S. ethanol in the 2017-2018 season.
Even with the expansion, the vast majority of Brazil’s ethanol will still likely be made by sugar-cane millers for the foreseeable future. Those processors are typically more efficient and emit less carbon dioxide. They can also produce more liters per hectare and generate their own energy by burning bagasse, or cane residue left over from the crushing process.
Mountain of Debt
Still, many sugar mills have struggled with a mountain of debt. The loans built up over years of expansion following the introduction of flex-fuel cars in Brazil in the early 2000s. Since then, the industry has struggled with a slump in sugar prices –the plants process cane into both biofuel and sweetener– and fuel-price caps that encouraged consumption of traditional gasoline. As a result, not a single new sugar-ethanol project has been announced for almost a decade.
Things look different for corn-ethanol makers like FS Bioenergia, which a year ago started Brazil’s first plant making biofuel exclusively from the grain in Mato Grosso. In the first quarter of 2018, FS — a joint venture between Iowa-based Summit Agricultural Group and Brazilian holding company Tapajos Participacoes SA — announced plans to invest 1.4 billion reais ($350 million) to increase its production fivefold to 1.2 billion liters by 2020. Other projects, including a Cargill-backed plant in Goias state, can process both corn and cane into ethanol in so-called flex mills.
“There’s a huge corn surplus to be turned into ethanol,” Rafael Abud, the chief executive officer of FS, said in an interview. “We have been evaluating opportunities to further increase capacity.”
-------------------------------------------------------------------------------------------------------------------------------
Editors Note:
To apply for becoming a contributor of EN-SJGLE.com,
welcome to send your CV and sample works to us,
Email: Julia.Zhang@ubmsinoexpo.com.
E-newsletter
Tags