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China Takes U.S. Ethanol Export Market by Storm; DDGS Exports Slip by 19%

March 7, 2016


U.S. ethanol exports had a strong start in 2016, expanding 7% over December volumes to a 14-month high, according to RFA analysis of government data released late Friday. The industry shipped 87.1 million gallons (mg), with China taking a third of the market at 29.4 mg—rivaling the record of 32.6 mg to China last October. Meanwhile, the long-time top export destination of Canada received just 13.7 mg—the lowest volume of exports north of the border since October 2010. The United Arab Emirates (10.9 mg) and South Korea (10.4 mg) were other top markets in January. Brazil brought in a fairly sizable volume (6.6 mg) considering its recent absenteeism from the U.S. export picture. January's robust exports equate to 1.05 billion gallons on an annualized basis. Denatured fuel ethanol exports saw a 29% month-on-month increase to 65.0 mg in January. China grabbed 29.4 mg (45%) of that market, with Canada (12.2 mg, or 19%), the UAE (8.1 mg, or 12%) and South Korea (5.9 mg, or 9%) continuing as stable partners. January exports of undenatured ethanol for fuel use fell 29% from December to 20.2 mg. Brazil (6.6 mg) and South Korea (4.5 mg) received 55% of undenatured fuel exports, while the Philippines (2.9 mg), the UAE (2.8 mg), Mexico (2.2 mg) and Peru (1.1 mg) rounded out our primary customers. Sales of undenatured ethanol for non-fuel, non-beverage use crashed to the lowest level since February 2013, dipping 64% to 212,369 gallons. Similarly, denatured non-fuel use ethanol exports slumped 21% to 1.7 mg—the lowest volume in over a year. The U.S. kept exports of non-fuel product close to home with 78% of total shipping to Canada and 9% to Mexico. As for imports, the United States imported just a splash of ethanol for fuel use in January. Inbound shipments came from Canada (500 gallons) and the Netherlands (165 gallons). Given the paltry import figure, January U.S. net exports of 87.1 mg were the highest since the record month of December 2011. January exports of U.S. distillers dried grains with solubles (DDGS)—the animal feed co-product manufactured by dry mill ethanol plants—fell 19% from January to 800,580 metric tons (mt). DDGS exports to China tallied at 218,961 mt, representing a 3% decrease over December volumes but an increase in market share (27% of total U.S. exports vs. 23% in December). DDGS exports to Mexico were also a healthy 195,669 mt (24%), with smaller shipments distributed across several countries including Ireland (48,456 mt), Canada (47,617 mt), Thailand (46,838), Vietnam (45,744 mt) and South Korea (45,046 mt). Contracting volumes in China, Spain and Turkey were responsible for a substantial portion of the month-on-month decrease in exports, with shipments to Mexico doing their part to help offset those losses.