World ethanol surplus pegged at 658 million gallons

In Brazil, consultant Jonathan Kingsman estimated a world surplus of ethanol at 658 million gallons, compared to a small shortage in 2006. He projected that, with the rise in ethanol feedstock prices, Brazil would find excellent export potential in Europe in 2008.  “Demand is disappointing for ethanol due to logistic problems, resistance, political issues,” he said.

In addition to an ethanol surplus, there is a worldwide sugar surplus that has many governments looking to ethanol production to solve.

A provision in the 2007 Farm Bill requires the Department of Agriculture to buy surplus domestic sugar resulting from the influx of Mexican sugar next year when the sugar tariff is lifted next year. The government would sell the sugar, at a discount, to ethanol producers. The expected market price for sugar has not been determined, but will compete with a per gallon raw feedstock cost of approximately $1.17 per gallon for corn ethanol.

India is projected to have a surplus of 11.5 million tonnes, based on a projected 33.15 million tonnes harvest this year, which would be a world record for national sugar production. Recently, 10 sugar-producing states have agreed to a framework for a national E10 mandate. India’s sugar crop this year is expected to exceed 29 million metric tons. With domestic consumption at 19 million tons and exports at 1.5 million tons, the country is turning to ethanol production to avoid a catastrophic sugar glut.

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