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October 31, 2018

Corn-Based Ethanol production focus of Meeting in Mato Grosso

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Industry representatives, scientists, politicians, and producers met last week in the city of Lucas do Rio Verde in central Mato Grosso to discuss the future of corn-based ethanol production in the state. The city of Lucas do Rio Verde was a logical choice for the meeting because it is the site of Brazil's first corn-based ethanol facility, which started operations in June of 2017. In fact, as part of the meeting, participants toured the facility.

The meeting was called the Corn Ethanol Industry Day and it was sponsored by the National Union of Corn Ethanol. Corn-based ethanol production in Brazil is in its infancy accounting for only about 2% of Brazil's ethanol production, but supporters feel it has tremendous growth potential.

There are nine mills in Brazil that can utilize corn to make ethanol. The majority of those mills have been retrofitted to utilize corn when sugarcane is not available, which is usually the case during the summer rainy months. There is one corn-based ethanol facility in Mato Grosso with two more under construction.

Supporters of corn-based ethanol production cite many benefits including: the production of value added products such as ethanol and DDG's (dry distillers grain) instead of paying very high transportation costs to ship the corn to distant ports, higher local corn prices, more local jobs, stronger tax base, and a benefit for the local livestock industry through the production of DDG's used in livestock feed.

One participant in the meeting, Ricardo Tomczyk, cited a novel benefit of more corn-based ethanol production and that was fewer trucks on the state's highways. He indicated that there would be 30,000 fewer trips made this year by dual-tandem trucks hauling corn to distant ports because the corn would be utilized by local ethanol facilities instead. Fewer trucks mean less wear and tear on the state's highways and safer conditions for motorists.

Brazil's president elect, Jair Bolsonaro, recently stated his support for ethanol production by predicting that Brazil would regain its position as the world's number one ethanol producer after losing it to the United States several years ago. Bolsonaro will assume power on January 1, 2019.

The sugar/ethanol sector in Brazil has run into hard times in recent years. Low sugar prices and lack of investments has led to dozens of sugar/ethanol mills closing their doors in recent years. Several dozen mills in Brazil are currently operating in the red and are in danger of closing their doors as well.

The one bright spot in the ethanol sector is corn-based ethanol production. As Brazilians continue to produce more corn in the interior of the country, ethanol production looks more attractive as a way to overcome the very expensive transportation cost getting the corn to distant export facilities. Farmers are encouraged as well because they feel ethanol facilities will offer them increased opportunities to market their corn at hopefully higher prices.