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Ethanol and DDGS Continue U.S. Export Market Expansion in August

October 5, 2016

           

U.S. ethanol exports totaled 77.9 million gallons (mg) in August, up 12% from July according to government trade data released this morning and analyzed by the Renewable Fuels Association. Brazil upped its purchases of U.S. product by 65% over July to 25.1 mg (32% of total exports)—edging out Canada (20.9 mg, or 27%) as the top customer in August. India also increased its purchases of U.S. product to 14.0 mg (18%), while the remaining quarter of U.S. exports were carved out in smaller portions to 31 markets—including China (1.5 mg, or less than 2%). Year-to-date exports stood at 594.3 mg, implying an annual total of 891.4 mg for calendar year 2016. August exports of U.S. denatured fuel ethanol fell 10% from the prior month to 19.8 mg. Most denatured product moved within close proximity of our borders with 17.8 mg (90%) crossing to Canada and 1.9 mg (9.8%) to Jamaica, with scant amounts heading to the Bahamas, Kuwait and Mexico. Export sales of undenatured fuel ethanol jumped by 15% over July to 50.6 mg—only the second time in 18 months to breach 50 mg. Brazil increased its imports to 25.1 mg—half of all U.S. shipments—as did India at 14.0 mg (28%). The Philippines reduced its draw from a large July offtake, down to 3.8 mg (8%). Other notable destinations were Peru (2.2 mg), Mexico (1.8 mg), China (1.5 mg) and Singapore (1.1 mg). Sales of denatured ethanol for non-fuel use tripled over July to 1.1 mg, particularly given Mexico's purchase of 777,371 gallons. Similarly, August sales of undenatured ethanol for non-fuel, non-beverage use more than doubled over the prior month to 6.5 mg—the highest level on record since March 2012. More than half of those shipments were destined for Nigeria (3.4 mg), with Canada picking up 3.0 mg (47%) of the shipments. For the third straight month, sizable volumes of shipments of ethanol were imported into the United States. Brazil shipped 10.7 mg of undenatured fuel—a 2% increase over July. Despite the nearly 32 mg of imports streaming in this summer, the year-to-date total of 33.7 mg is running just 3% ahead of 2015, and suggests annual imports in 2016 of 50.5 mg. U.S. distillers dried grains with solubles (DDGS)—the animal feed co-product from dry mill ethanol production—continued to experience sizable export growth in August with a 6% increase over July to 1.160 million metric tons (mt). DDGS exports have been rebounding since the low in February 2016, with August exports up 34% since that point. In August, China was the top market for U.S. exports for the fourth month in a row, receiving 262,201 mt. However, China's share of the U.S. DDGS export market retracted from 33% in July to 23% in August. American DDGS marketers successfully broadened their scope to offset China's purchasing fluctuations as evidenced by several increases in purchases by top markets; notably, Vietnam has tripled its imports of U.S. DDGS since January. Top customers for U.S. DGS were Mexico (200,199 mt), Vietnam (127,009 mt), South Korea (117,029 mt), Thailand (75,438 mt) and Turkey (68,194 mt). Through August, DDGS exports stood at 7.6 million mt, indicating an annualized total of 11.4 million mt.