Brazil to Buy More Ethanol, Could Ease The Midwest Economy

Sep 3, 2019

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A new report suggests slow or no economic growth over the next several months in nine Midwest and Plains states.

The report issued today says the Mid-America Business Conditions Index dropped below growth neutral in August, hitting 49.3 compared with 52.0 in July. The index had remained above growth neutral for 32 straight months.

Creighton University economist Ernie Goss oversees the survey, and he blamed the slowdown on weak farm and manufacturing sectors, produced in part by tariffs and a global economic slowdown.

It looks like Brazil is going to allow more US-produced ethanol into the country, and that takes some of the pressure off farmers and ethanol producers.  The Environmental Protection Agency recently granted more than thirty Renewable Fuel Standard waivers to the oil industry that will allow refineries to use less ethanol than originally mandated by law.  

Brazil is raising the tariff rate quota, from about 159 million to about 198 million gallons for the next year. The quota essentially regulates the amount of U.S. ethanol allowed into Brazil before the tariff kicks in. 

David Ripplinger is a North Dakota State Agricultural Economist.  Ripplinger says raising the quota is a bit of good news for corn farmers and ethanol producers.

It’s not huge news, I think there are other things going on in terms of Brazil that are much more exciting in the long term.  As they are looking to enact a low carbon standard that would increase ethanol use substantially, which would be 

That low carbon standard in Brazil could help reopen the Plymouth Energy Plant in Merrill, which is temporarily shut down. Brazil was the top export market for U.S. ethanol in 2018 at 513 million gallons, up from 428 million in 2017.  That low carbon standard in Brazil could help reopen the Plymouth Energy Plant in Merrill, which is temporarily shut down.