US ethanol exports rise to record in 1H

US ethanol exports climbed to a record high in the first half of the year, driven by strong domestic production and foreign demand.

US ethanol exports averaged 125,600 b/d in January-June, up by a third from the same period last year and 2.2pc higher than the previous first-half record set in 2018, according to US Department of Agriculture (USDA) data going back to 2012.

Exports would set a full-year record if the pace is maintained through the end of 2024. US ethanol producers like Green Plains and ADM have said they are confident that robust exports will extend through the end of the year.

Robust domestic production has fed the rise in US exports, with output averaging 1.03mn b/d through June, the third highest rate through the first six months behind 2018 and 2019, according to EIA data dating to 2010. January-June output would also rank third on an annualized basis.

Low prices for corn, the main feedstock for US ethanol, have incentivized higher production by boosting margins. Front month CBOT corn futures this year have averaged 439¢/bushel, down by nearly a third from 2023, as prices near pre-2021 levels when they averaged less than $4/bushel for six consecutive years. Participants are expecting a record or near-record US corn yield this year, pressuring the domestic corn market.

Canada and the UK consistently combine for nearly half of US ethanol exports, with Asian markets emerging as key destinations for US ethanol. Asian markets combined for a 19pc share of US exports in the first half, compared with a 10pc share in the same period a year earlier.

US exports to Asia-Pacific in the first half more than doubled from the same period last year to around 24,000 b/d as countries in the region raise ethanol fuel blend rates. India is steadily increasing its fuel ethanol blends, with a goal of 20pc by 2025, helping nearly double first-half receipts of US ethanol to 13,100 b/d.

Exports to the UK have also nearly doubled to 16,300 b/d, as the country can take advantage of favorable trade economics into the rest of Europe in addition to meeting demand from its own fuel blending mandates.

US ethanol imports remain relatively small, averaging 183 b/d in the first half, up from 19 b/d in the same period last year. Nearly all undenatured ethanol imports for fuel use arrive from Brazil, with the country's sugarcane-based ethanol used as feedstock at LanzaJet's sustainable aviation fuel (SAF) plant in Georgia.

US ethanol exports may continue to rise in the coming months and years as the growing SAF market provides new demand pathways for ethanol.

By Payne Williams