According to preliminary data from the federal Energy Information Administration, monthly ethanol imports to the U.S. fell 8.4% to 939,000 barrels in February, the lowest level seen since last May.

February ethanol imports averaged 31,300 barrels a day, down from 33,000 barrels a day in January.

Last May, U.S. fuel marketers were beginning to ramp up their use of the plant-derived gasoline additive.  Refiners greatly increased their ethanol use because a federal mandate for its use began and because gasoline manufacturers were ending their use of the petroleum-based additive methyl tertiary butyl ether.  Refiners greatly increased their ethanol use after a federal law was passed mandating its use.  Imports of 681,000 barrels in May, 2006 more than doubled by June and hit a peak of 3.203 million barrels in August before easing to 1.191 million barrels in January, 2007.

Most of the volume - 10 out of 14 shipments - was bound for ports in New Jersey. Three shipments went to Hawaii and one shipment of 1,000 barrels from Canada went to North Dakota. Four shipments totaling 572,000 barrels sailed from Brazil and six, totaling 212,000 barrels, came from El Salvador. Two ships came from Jamaica and the last sailed from Trinidad.

 
The number of ships is close to the Williams shipping agency’s estimate issued in late March. The Brazilian agency said 18 ships were loading ethanol in February.  Williams’ estimate for April loadings is higher, at 22 ships.

Scientists with the Agricultural Research Service (ARS), the U.S. Department of Agriculture’s chief scientific research agency, have added to their team a one-armed robot, which is expected to speed up studies aimed at harnessing the power of proteins for industrial uses, such as making fuel ethanol from fibrous corn stover.

The robot is the cornerstone of an automated system called the “plasmid-based functional proteomics work cell.”  According to Stephen Hughes, a molecular biologist with the ARS National Center for Agricultural Utilization Research in Peoria, IL, the system is the first of its kind to fully automate several procedures that have traditionally been carried out by (human) hand, such as extracting genetic material from the cells of plants, microbes and other organisms; making DNA copies of genes; inserting the copies into Escherichia coli; culturing these bacteria so that the copies can be sequenced and their proteins identified; and inserting desirable genes into yeasts used to make ethanol.

Because of the mechanized arm’s fast, precise movements, the robotic system can carry out such tasks hundreds, or even thousands, of times faster than a human could, Hughes claims. Hughes and colleagues in the ARS center’s Bioproducts and Biocatalysis Research Unit codeveloped the system with a team from Hudson Control Group (of Springfield, NJ) in 2004.

Of particular interest is using the robotic system to genetically modify new strains of Saccharomyces yeast that can metabolize sugars locked up within corn fiber, something these microbial workhorses have so far failed to do.

Currently, only the starch from corn and other grain crops is being converted commercially into the sugars from which ethanol is derived.  With the Saccharomyces yeasts now used, this equates to nearly three gallons of ethanol from a bushel of corn. Using new strains capable of breaking down corn fiber could potentially squeeze 10% more ethanol from the grain, Hughes and colleagues estimate.

Ethanol prices in Sao Paulo inverted last week’s upward trend and began declining as the 2007 sugar cane crop starts to hit the market, putting an end to the inter-harvest period.

 
Falling prices are normal for the end of the inter-harvest period.  “Prices used to go down between 5% and 10% when the new harvest hits the market,” said Marcelo Andrade, director of Rio de Janeiro-based trading firm Ecoflex Trading.

The price for anhydrous ethanol, a gasoline additive, fell slightly from 1.071 Brazilian reals ($0.52) per liter in the week of April 1-5 to BRL1.070 in the week between April 9-13, according to the Center for Advanced Applied Economic Studies, or Cepea, which publishes local market prices each Friday.

 
The price for hydrous ethanol, a gasoline substitute, continued to fall, from its peak at BRL0.96 during the March 26-30 week, to BRL0.94 during the April 9-13 week.

Sao Paulo is Brazil’s No. 1 ethanol-producing state, accounting for roughly 60% of the country’s total ethanol production. Brazil is the world’s No. 2 ethanol producer, but No. 1 ethanol exporter.

Yesterday, Former Florida Governor Jeb Bush told Brazilian sugar and ethanol business leaders that the U.S. should eliminate its tax on ethanol imports from Brazil.

“The U.S. should remove the tax on Brazil ethanol imports to really get the ethanol market moving,” Bush said of 54 cents per gallon tax.

The president of the powerful Sao Paulo Sugarcane Industry Association, Eduardo Carvalho, told Dow Jones Newswires, “It’s very important that someone like Mr. Bush has this opinion on ethanol. But there is no one person capable of removing tariffs by himself. This is a big political game.”

Bush also said the U.S. should treat ethanol as part of its energy policy, not agricultural policy. Brazil, the world’s ethanol export leader, and the U.S. account for three quarters of the world’s ethanol production.

Last Thursday, Missouri’s Senate, seeking to boost alternative fuels production and consumption, endorsed a biofuel mandate and new tax breaks for motorists who pump ethanol or biodiesel fuels into their gas tanks.

The bill endorsed last week would apply a 5% biodiesel mandate to diesel fuel sold in Missouri beginning in April, 2009 - unless the price of ethanol exceeds the price of traditional diesel.  Sen. Bill Stouffer is sponsoring the legislation, which received first-round Senate approval.

Also receiving preliminary approval was a bill by Sen. Luann Ridgeway granting a variety of tax breaks, including income tax credits up to $20,000 or 20% of the cost - whichever is less - for gas stations that install tanks and pumps for alternative fuels.  In addition, beginning in 2008, Missouri residents who buy a hybrid vehicle could claim an income tax credit of up to $1,500 or 10% of the purchase price - whichever is less - and in 2008 only, Missouri would waive the sales tax for purchases of E-85-equipped vehicles. 

Already in place in Missouri is a law mandating that most Missouri-sold gasoline contain a 10% ethanol blend beginning next January - as long as its price is cheaper than regular gasoline.

The bill, according to the Associated Press, is generally supported by Missouri’s agriculture community, which is supplying more corn and soybeans to new ethanol and biodiesel production plants proliferating throughout the state.
 

Malaysia-based Pioneer Bio Industries Corp Sdn Bhd claims it will be able to produce a startling 1.7 billion gallons - roughly equal to 780,000 barrels of oil equivalent per day - of nipah (a.k.a. nypa fruticans or mangrove palm) palm ethanol per year when its planned refineries in Malaysia’s North-Western Perak State begin operations in 2009.

Ethanol can be obtained from fermenting the sugar-rich nipah sap that can be tapped continuously from the trees’ inflorescence, and nipah has a very high sugar-rich sap yield.  Some studies estimate potential ethanol yields to be as high as 20,000 liters once plantation management is optimised.  The tapping technique, however, is labor-intensive and it remains a question whether production can be scaled up that easily.

At a media briefing, the “National Biofuel Project based on Ethanol from Nypa Palm - Industrial Project Investment and Solution for Solving Global Warming,” Pioneer Bio Indistries chairman Md Badrul Shah Mohd Noor put the venture into a larger perspective, indicating that U.S. ethanol demand alone stood at 22 billion liters last year, and that the biofuel is forecast to provide 30% of global energy by 2020, up significantly from only 2% last year.

Giving details about the nipah project, Badrul Shah said the Perak state government has awarded the company the rights to harvest nipah sap on 10,000 hectares of land, for which it has to pay 324 million ringgits (€70/US$94 million) per year.  PBIC, a subsidiary of Pioneer Vaccination Biotech Corp Sdn Bhd, holds the patent to produce ethanol from nipah palm sap.  Badrul Shah said the company will sign a multi-billion dollar contract with a major international company in July to supply nipah-based ethanol over a five-year period.

Brazil’s budding biodiesel program will be more reliant on soy farmers than anyone else, the local Estado newswire reported Monday.

Tamara Dvoskin, a biodiesel specialist from international consulting firm Frost & Sullivan, says that 89% of Brazils current biodiesel production is being made from soyoil. The rest is made from castor and palm seed oils.  Brazil’s biodiesel market will remain local, she says, with small volumes being made available to export. The same model is used for the Brazil ethanol market, where some 3.5 billion liters are exported while 16.5 billion liters are used domestically.

Dvoskin said Brazil is fast becoming a focal point of alternative fuels worldwide, due to its relatively low production costs and technical know-how: “Brazil already has the infrastructure to produce biodiesel, contrary to other countries in Latin America.”

The soy industry has been arguing for the same incentives given small family farmers in the Northeast, who get tax breaks for raising castor beans and palm for biodiesel producers.  “Without these subsidies it would be impossible for Brazil to truly develop its biodiesel sector,” Dvoskin said.

Try not to laugh, but, according to UK publication the Guardian, Cuban and Venezuelan heads of state have recently slandered the biofuels industry, warning that the U.S.-backed rush towards ethanol will worsen global hunger and poverty. 

 
Cuban President Fidel Castro wrote two newspaper articles, voicing alarm at the prospect of countries boosting sugar and corn crops to make ethanol, the Guardian reports.  For the Cuban Communist party’s official newspaper, Granma, Castro wrote that by diverting crops to feed cars (as opposed to feeding people), the price of food would rise, and the world’s poor would go hungry.

 
Venezuelan president Hugo Chavez was quoted by the Guardian: “When you fill a vehicle’s tank with ethanol, you are filling it with energy for which land and water enough to feed seven people have been used.”  It remains unclear, the paper reported whether Venezuela would go ahead with sugar mills and ethanol plant investments.  Last month, Dow Jones Newswires reported that Cuba has plans to build eight new ethanol distilleries and export roughly 200 million liters of biofuel by 2011.

The American Coalition for Ethanol (ACE) offered  testimony for yesterday’s field hearing of the U.S. Senate Agriculture Committee’s Subcommittee on Energy, Science, and Technology.

 
The event was held on the campus of South Dakota State University in Brookings and was hosted by Senator John Thune (R-SD), the subcommittee’s ranking member.  The event, “The Next Generation of Biofuels: Cellulosic Ethanol and the 2007 Farm Bill,” was a forum for discussing how the 2007 Farm Bill can play a role in directing the development of the biofuels industry, especially the commercialization of cellulosic ethanol.

“Given the likelihood that the next Farm Bill will contain a meaningful energy title designed to promote biofuels and renewable energy, ACE is grateful for the opportunity to submit testimony at this field hearing on behalf of the U.S. ethanol industry,” said Brian Jennings, ACE executive VP.  “We are also pleased that the hearing featured the expertise of two ACE member ethanol companies helping develop the technology breakthroughs necessary to commercialize cellulosic ethanol - Poet Energy and VeraSun Energy.”

In its testimony, ACE outlined cellulosic ethanol’s greta potential, as well as the four overriding challenges to making cellulosic ethanol a commercial-scale reality: 1)the cost and complexity of converting biomass feedstocks into ethanol, 2) the capital costs of financing and constructing cellulosic biorefineries, 3) feedstock challenges (how and where to grow the feedstocks; how to harvest, collect, transport, and store biomass), and 4) sustainability challenges (respecting soil quality, wildlife habitat, land conservation practices).

ACE pointed to the limitations of the “blend market” and the limitations of how much corn can be used for ethanol as reinforcements of the need for cellulosic ethanol to become a reality in the near future. “There is an intersection between what we refer to as the ‘blend market,’ where E10 comprises virtually every gallon of motor fuel in the U.S., and the upward limitations of how much corn we can distill into fuel ethanol, reinforcing the need to make cellulosic ethanol a reality if we are to achieve a more meaningful reduction in fossil fuel use,” Jennings testified.

In the testimony, ACE encouraged Congress to consider a public policy framework to help create certainty for cellulosic and corn-based ethanol.  The framework contains the following:
- expanding the RFS to reach 10 billion gallons of biofuels per year by 2010, 30 billion gallons by 2020, 60 billion gallons by 2030
- promoting the use of higher blends of ethanol is the existing fleet of automobiles
- increasing funding for and consolidating federal cellulosic biofuels loan guarantee programs into a single program at USDA
- establishing a pilot cellulosic biofuels feedstock program
- requiring automakers to ensure that all vehicles in the U.S. are FFV and require installation of E85 and/or blender pump at all gas stations affiliated with major oil companies
- establishing a cost-share program under Title IX of the Farm Bill to provide assistance to ethanol plants for the installation of low-carbon processing and conversion technologies
- extending the Blender’s Credit for ethanol beyond 2010 and retain the existing secondary import tariff offset on imported ethanol

An article in today’s Chicago Tribune reports that, according to analysts from UBS AG and Friedman, Billings, Ramsey & Co., U.S. ethanol output could rise as much as 60 % by the end of the year.

As a result of more ethanol plants opening and beginnning operations, both prices and profits could be hurt, analysts explain. As supplies increase, ethanol producers will have to cut prices to compete with gasoline and profits will be trimmed, analysts said Monday in separate reports.

In January, ethanol production jumped about 5% to a record 5.9 billion gallons a year, from 5.6 billion gallons a year at the end of 2006, according to U.S. government statistics, the report from UBS said. If growth were to continue each month at that rate, ethanol production would be at about 9 billion gallons a year by the end of 2007, according to the analysts. “It is difficult to tell at this point if there is a strong link between ethanol stocks and pricing; however, we think this data may become more important as more supply enters the market,” wrote one analyst in a UBS report.

In a separate report, Friedman, Billings, Ramsey & Co. estimates that ethanol supplies may rise as much as 33% to 7.6 billion gallons by the end of the year, exceeding demand.  Friedman lowered its ethanol price forecast for 2007 to $2.05 a gallon from $2.10 a gallon and cut its forecast for the years 2008-2010 to $1.95 a gallon from $2.00 a gallon. “We are adjusting our commodity price forecasts and reducing our earnings estimates and price targets accordingly,” wrote Eitan Bernstein, an analyst at Friedman. More operating plants, higher prices for corn - the primary ethanol feedstock - and continued competition from gasoline will lead to reduced margins, the Friedman report said.