USGC Work To Build On Surge Of Ethanol Exports To Mexico

This week’s U.S. Grains Council’s (USGC’s) Chart of Note illustrates the growing interest from Mexican buyers in U.S. ethanol, with purchases increasing an astounding 1,756 percent from the 2006/2007 marketing year until last marketing year.

In 2006/2007, Mexico bought just 1.8 million gallons (6.8 million liters) of U.S. ethanol, while during the 2014/2015 marketing year the United States’ southern neighbor bought more than 33.4 million gallons (126.5 million liters).

Mexico’s current imports of U.S. ethanol are primarily used for industrial purposes. However, reforms in the country’s energy policy are changing the picture for U.S. exports there. Pemex, the state-owned oil company, has a monopoly set to end in 2017, and gasoline and diesel prices will no longer be set by the Mexican government in 2018. This means that in a few years’ time, the company will need to be competitive in the international marketplace.

Last year, Pemex announced its plan to introduce its first-ever blend of gasoline mixed with ethanol and has since awarded a few contracts to local ethanol plants. However, given the relatively small scale of Mexico's industry, it is unlikely it can meet the country's immediate fuel ethanol blending needs. This will likely create new opportunities for U.S. exports of ethanol to the market, which will be tariff-free under the North American Free Trade Agreement (NAFTA).

This has information has helped reinforce the Council’s efforts to promote U.S. ethanol exports in this market. An example of this undertaking is USGC’s work with the Renewable Fuels Association and U.S. Department of Commerce to coordinate arrangements for a team of Mexican fuel buyers and policymakers to attend the international buyers program during the National Ethanol Conference next week in New Orleans, Louisiana. While there, the team will meet with U.S. ethanol producers and traders, learn about U.S. ethanol policy and hear the latest updates from across the U.S. ethanol industry.

Click here to read past Global Update articles about Mexico’s demand for ethanol.