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Palouser
Senior Advisor

Rabobank feels US ethanol production will rise

I've just read the summary so far, but apparently their report feels Brazil cannot increase their sugar output quickly enough to supply its needs for ethanol and will remain an importer. Economically ethanol works in a high energy price environment.

 

I had heard that demands for sugar/ethanol kept cane in Brazil from being replaced with new more productive plantings as older fields begin their inevitable production declines. Two years will be the minimum to catch up on productivity.

 

 

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3 Replies
GoredHusker
Senior Contributor

Re: Rabobank feels US ethanol production will rise

If I understand correctly what I've read, they're already a year into catching up to productivity.  I believe it was February, 2011 when sugar prices hit their all time high.  Brazillian farmers at that time started gearing up for more sugar production.  The article also stated that in the medium to long term significant opportunities for Brazilian cane ethanol existed due to the abolition of the U.S. import tariff. 

 

On a side note, I read an aritcle about T. Boone Pickens energy plan.  The thing that caught my eye was the amount of money we have enriched other nations with concerning oil.  He called it the biggest wealth transfer in history.  If Brazil gets their ducks in a row with regards to ethanol, won't we basically see another wealth transfer as we start to buy Brazillian ethanol?  People like to claim they're all for buying American made goods, but the monthly deficit reports show otherwise.  If Brazillian ethanol is even a nickel a gallon cheaper laid into the States, we'll buy it.     

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kraft-t
Senior Advisor

Re: Rabobank feels US ethanol production will rise

Brazillion ethanol is an american product. As is oil from Canada or corn from argentina. North America South America and Central america all qualify for the American label.

 

It's a bit arrogant to think we are the only americans on the globe!

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Palouser
Senior Advisor

Re: Rabobank feels US ethanol production will rise

Brazil started ramping up acres but my understanding is they kept acres that were past their prime to cash in on lucrative prices (usual farmer response since your break even production level changes). Those acres have to be replaced and it takes several years to reach good production from new acres. 

 

A deal is a deal. I don't buy the connotations of a 'wealth transfer'. If we didn't need it we wouldn't buy it. Energy is productivity. Right now they're buying from us. Trade is NEVER a one way street.

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