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World ethanol market will tighten in 2017, says Green Plains

The world ethanol market will tighten next year, as US consumption and exports outstrips production, while Brazilian output declines, Green Plains said.

The US ethanol producer saw demand rising, thanks to strong gasoline demand, and a higher proportion of ethanol used in gasoline.

Ethanol, which in the US is primarily produced from corn, is blended into gasoline to meet carbon targets.

US in deficit

Speaking to investors, Todd Becker, chief executive at Green Plains saw total US ethanol demand at 14.8bn gallons, while exports were seen at 1bn gallons.

That totals 15.8bn gallons of total demand for 2017, and year-to- date 2016 the annualised production rate for the industry was just under 15.1bn gallons.

Even if producers can average 1bn barrels a day next year, that only leaves production at 15.8bn gallons, he noted.

And Brazil will produce less ethanol for export in 2017 will fall below levels seen in 2015, Mr Becker said.

Therefore, "the world market could be structurally short of ethanol at different times of the year," he said.

Ethanol exports of $1bn

Green Plains said it anticipates $1bn in ethanol exports in 2017 to buyers such as China, Brazil, South East Asia and Canada.

"We are starting to see a strong export pattern in Brazil all the way through March or April of next year," said Mr Becker.

"So we expect Brazil to continue to take our volumes, which they have started to take this quarter."

Mr Becker said there would be demand from China too next year of "a couple hundred million gallons".

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