Reese Ewing – CNBC/Reuters, 9/20/2012
Brazilian ethanol is rushing back into the United States after a three-year ebb, drawn less by the severe drought that has inflated corn costs than by biofuel regulations that could more than triple next year’s shipments.
Even as corn prices shot to record highs above $8 a bushel while sugar futures languished at near two-year lows of 19 cents per lb, Brazil’s sugar-based ethanol production was still more costly than U.S. corn-based domestic supply, traders say.
Brazilian ethanol is competitive in the U.S. market, thanks only to credits from the U.S. Environmental Protection Agency, which requires that fuel companies use 500 million gallons (1.9 billion liters) of so-called advanced biofuels to blend into gasoline this year. The EPA recognized Brazilian ethanol as advanced in February 2010.