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#1 Isn’t Good? U.S. Leads World In Ethanol Exports

May 1, 2012

Americans love being in the top position, no matter what it is. But according to the results of a new study released by Hart Energy, the United States is leading the world in exporting ethanol and that’s not consistent with our renewable energy goals.

According to the study, U.S. & Brazil Ethanol Outlook to 2022, the increase in exports will leave the U.S. in a position where they cannot achieve the national Renewable Fuel Standard (RFS) and California’s Low Carbon Fuel Standard (LCFS). Tammy Klein, assistant vice president of Hart Energy, believes the U.S. will have to increase its exports of Brazilian ethanol to meet the standards of these programs. And they may not be able to provide what we will need.

So who is benefitting from the new number one status? One would think agricultural giant Archer Daniels Midland Company (ADM :NYSE) would be reaping the benefits of the new title but according to their Q3 2012 earnings report released today, that isn’t the case.

ADM claims the operating profit on bioproducts dropped 70 percent from $121 million in the previous quarter to $37 million in Q3 2012. Much of this was blamed on declining profit margins for ethanol due to over supply. And ADM probably doesn’t believe the situation will reverse itself in the near future as they closed a 30 million gallon per year ethanol dry mill at Walhalla, N.D.

But being the leading exporter will actually help the U.S. ethanol industry in the long term. “The good news is the U.S. ethanol industry has been able to move forward despite the ‘blend wall’ and open new export markets around the world,” said Maelle Soares Pinto, director of Hart Energy’s Global Biofuels Center (GBC). “The constraints we are seeing with Brazilian ethanol could open up opportunities for the U.S. ethanol industry.”

Shares of ADM were up 6.55 percent in afternoon trading.

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