WORLDBIOFUELS

## 322 / World Biofuels: FAPRI 2010 Agricultural Outlook 

# World Ethanol The world ethanol price increased 12.5% in 2008, to $1.74 per gallon. It decreased 8%, to $1.6 per gallon, in 2009 because of the 37% drop in crude oil prices coupled with an almost 60% reduction in U.S. ethanol net imports. The ethanol price increases almost 9% over the projection period, mostly because of higher ethanol demand from the U.S. brought about by the renewable fuels mandates. World net trade increased 10.8% in 2008 but declined 8.2% in 2009. As world demand for ethanol increases over the projection period, net trade is expected to rise 323.2%, reaching 4.1 billion gallons by 2019. Brazil’s ethanol production totaled almost 7 billion gallons in 2009, an increase of 0.9%. This translates into 333.3 mmt of sugarcane used in ethanol production. Production of ethanol in Brazil increases 96.8% by the end of the projection period, to 13.6 billion gallons. Sugarcane used in ethanol production increases 71.8%, reaching 572.8 mmt by 2019. Brazil’s ethanol consumption increased in 2009 by 7.7%, to 6.4 billion gallons. Its ethanol consumption is projected to increase 48.7% by 2019. Brazil’s net ethanol exports reach 4.1 billion gallons in 2019, an increase of 338.7%, partly because of the increase in U.S. ethanol import demand. Ethanol production in the EU increased almost 45% in 2008 and 14% in 2009. EU ethanol production is projected to reach 1.8 billion gallons in 2019, an increase of 127.4%. Consumption in the EU increased 10.3% in 2009, to 1.1 billion gallons. It is expected to reach 2.5 billion gallons in 2019, an increase of 129.2% over the decade. Total EU biofuels consumption reaches nearly 4% of transport fuels in 2019. EU net imports rise from 279 million gallons in 2009 to 655 million gallons by 2019 as consumption increases more than production. Chinese fuel ethanol production increased 15.3% in 2008, to 516 million gallons. Production is projected to continue to increase and reach 731.4 million gallons by 2019. Ethanol consumption in China increased from 414 billion gallons in 2007 to 448 million gallons in 2008. It increases 52.7%, to 744.9 million gallons, between 2008 and 2019. Net exports, which totaled 35 million gallons in 2008, are projected to decline over the projection period. By 2018, China switches to a net importer of ethanol, with net imports of 13.4 million gallons in 2019. In India, ethanol is produced mainly from molasses, a co-product in sugar production from sugarcane. India’s ethanol production decreased 32.6%, from 443 million gallons in 2008 to 298 million gallons in 2009, because of a decline in sugarcane production. Production rises to 634.9 million gallons in 2019, an increase of 112.9%. Consumption of ethanol in India was 473 million gallons in 2009 and is projected to increase 48.3%, to 702.1 million gallons, in 2019. India’s net imports increase from 53 million gallons in 2009 to 75.7 million gallons in 2019. Japanese net imports of ethanol declined 3.2%, from 123.6 million gallons in 2007 to 119.6 million gallons in 2008. Net imports are projected to increase 103.7%, to 243.7, by the end of the decade. Ethanol net imports in South Korea totaled 60.6 million gallons in 2005. They are projected to increase to almost 202 million gallons by 2019, an increase of 147.4% from the 2005 levels.

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# World Biodiesel The world price of biodiesel (Central Europe FOB) increases to $4.14 per gallon in 2010, driven by higher petroleum and vegetable oil prices. Lower exportable surpluses from Argentina as their B5 mandate is implemented and tariff barriers imposed by the EU (by far the dominant importer) on biodiesel originating from the U.S. also contribute to the price recovery. Increasing crude oil prices and the mandates in Argentina, Brazil, the EU, and the U.S. lead to price increases throughout the period. The world price reaches $5.58 per gallon by 2019. The EU is home to the world’s largest biodiesel industry and markets. Both the implementation of antidumping and countervailing duties by the EU and the domestic consumption mandates boost demand for domestically produced biodiesel. In response to these stimuli, the local industry increases production by 5% in 2010, on top of the 36% expansion observed in the previous season. Production continues its expansion and reaches 3.5 billion gallons by 2019. Pushed by the biofuels target, consumption continues to grow during the outlook period, reaching 4.0 billion gallons in 2019. The biodiesel share of diesel in transport is, however, still only about 5.8%. Net imports grow steadily over the outlook period and reach 559 million gallons by 2019. An export-oriented Argentine industry rapidly increased biodiesel production and exports from marginal production levels in 2006 to over 300 million gallons in 2009. This production continues its expansion path and reaches 464 million gallons by 2019. Implementation of the domestic B5 mandate in 2010, however, reduces the country’s exportable surplus by 36% year on year. The ensuing growth in domestic consumption keeps net exports from expanding beyond 270 million gallons over the next decade. Unlike in Argentina, most of the biodiesel production in Brazil has been motivated by domestic consumption mandates. This is expected to continue over the outlook period, and net exports remain at modest levels, not exceeding 80 million gallons. Consumption jumps in 2008, 2009, and 2010 because of the mandate (B2.5 by 2008, B3 and B4 by 2009, and B5 by 2010) and is expected to reach about 700 million gallons by 2019. While Brazil is striving to produce biodiesel from alternative vegetable oils, it is expected that soybean oil will remain the dominant feedstock. The combined biodiesel production in Indonesia and Malaysia is expected to increase from about 100 million gallons in 2009 to 182 million gallons in 2019. Domestic production growth is constrained by rising palm oil prices and repeated delays in the implementation of and changes in the domestic consumption mandates in these countries. Given the uncertainty generated by these changes, no domestic consumption mandate was included in the present outlook.

## 324 / World Biofuels: FAPRI 2010 Agricultural Outlook



# Ethanol Trade 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Net Exporters (Million Gallons) Brazil 945 1,124 1,324 1,430 1,553 1,736 2,089 2,599 3,118 3,660 4,148 China 35 37 23 23 17 11 7 6 0 -5 -13 Total Net Exports * 980 1,161 1,348 1,453 1,571 1,748 2,096 2,605 3,118 3,660 4,148 Net Importers Canada 171 194 220 236 253 266 277 281 290 297 308 European Union 279 315 373 407 457 491 517 546 581 613 655 India 53 91 89 89 88 87 86 80 78 75 76 Japan 137 149 162 172 183 194 204 213 223 233 244 South Korea 85 100 116 127 138 149 160 170 180 191 202 United States 180 226 291 317 333 432 715 1,168 1,606 2,077 2,470 ROW 75 85 97 107 118 128 139 149 159 170 180 Total Net Imports * 980 1,161 1,348 1,453 1,571 1,748 2,096 2,605 3,118 3,660 4,148 Prices (U.S. Dollars per Gallon) Anhydrous Ethanol Price, Brazil † 1.60 1.61 1.46 1.53 1.52 1.54 1.57 1.67 1.69 1.74 1.74 Ethanol, FOB Omaha 1.79 1.74 1.77 1.78 1.79 1.83 1.89 1.92 1.92 1.93 1.93 Note: 1 gallon = 3.7857 liters; 1 metric ton = 1237.1644 liters. * Total net exports are the sum of all positive net exports. † Represents world ethanol price.


# Biodiesel Trade 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Net Exporters (Million Gallons) Argentina 331 216 247 263 271 274 274 272 270 268 265 Brazil -1 -13 23 48 63 72 76 75 72 66 58 Indonesia 21 20 22 24 26 28 32 36 41 48 58 Malaysia 58 74 85 91 95 97 98 98 99 99 99 United States 157 24 5 2 12 20 21 25 49 83 122 Total Net Exports * 566 335 382 428 467 491 500 507 531 564 602 Net Importers European Union 375 269 333 380 419 443 452 460 485 519 559 Japan 17 17 15 15 15 15 15 15 15 14 13 ROW 174 35 34 34 33 33 33 32 31 30 30 Total Net Imports * 566 335 382 428 467 491 500 507 531 564 602 Prices (U.S. Dollars per Gallon) Central Europe FOB Price † 3.89 4.14 4.40 4.61 4.75 4.74 4.83 4.98 5.18 5.39 5.58 Biodiesel Plant 3.50 3.67 3.75 3.94 3.99 4.01 4.10 4.22 4.32 4.41 4.41 Note: 1 gallon = 3.7857 liters; 1 metric ton = 1136.36 liters. * Total net exports are the sum of all positive net exports. † Represents world biodiesel price.

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# U.S. Biofuels Production and Consumption 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Ethanol (Million Gallons) Production 10,699 12,304 13,295 13,648 14,042 14,627 15,293 15,827 16,274 16,763 17,307 Consumption 10,888 12,407 13,525 13,945 14,355 15,030 15,974 16,966 17,855 18,813 19,749 Net Trade -180 -226 -291 -317 -333 -432 -715 -1,168 -1,606 -2,077 -2,470 Feedstock in Ethanol Production (Thousand Metric Tons) Corn 98,283 111,773 119,932 121,954 124,249 128,149 132,603 135,782 138,144 140,451 141,832 Corn Stover 3 37 142 265 305 301 299 296 293 458 1,401 Switchgrass 0 0 0 0 0 0 0 0 0 312 1,566 Biodiesel Production 578 715 846 962 1,018 1,025 1,058 1,149 1,238 1,292 1,324 Consumption 401 660 807 945 1,000 1,002 1,027 1,119 1,203 1,242 1,245 Net Trade 157 24 5 2 12 20 21 25 49 83 122 Feedstock in Biodiesel Production Soybean Oil 913 1,143 1,461 1,687 1,763 1,761 1,915 2,147 2,286 2,383 2,444 Canola Oil 20 20 19 22 22 22 23 24 23 22 22 

# Argentine Biofuels Production and Consumptio n 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Biodiesel (Million Gallons) Production 326 384 418 438 449 455 459 461 462 463 464 Consumption 5 168 171 175 178 182 185 189 192 196 199 Net Trade 331 216 247 263 271 274 274 272 270 268 265 Feedstock in Biodiesel Production (Thousand Metric Tons) Soybean Oil 1,102 1,296 1,406 1,466 1,498 1,513 1,519 1,520 1,519 1,516 1,513 

# Brazilian Biofuels Production and Consumption 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Ethanol (Million Gallons) Production 6,915 7,886 8,429 8,785 9,287 9,811 10,442 11,196 11,988 12,805 13,608 Consumption 6,365 6,646 7,015 7,389 7,739 8,079 8,362 8,608 8,877 9,151 9,461 Net Trade 945 1,124 1,324 1,430 1,553 1,736 2,089 2,599 3,118 3,660 4,148 Feedstock in Ethanol Production (Thousand Metric Tons) Sugarcane 333,336 370,306 387,963 399,781 417,951 436,649 459,526 487,221 515,928 544,998 572,815 Biodiesel (Million Gallons) Production 406 571 620 656 684 706 722 734 744 751 757 Consumption 396 585 597 608 621 633 646 659 672 685 699 Net Trade -1 -13 23 48 63 72 76 75 72 66 58 Feedstock in Biodiesel Production (Thousand Metric Tons) Soybean Oil 1,204 1,685 1,813 1,905 1,972 2,018 2,049 2,068 2,078 2,083 2,082

## 326 / World Biofuels: FAPRI 2010 Agricultural Outlook 

# Canadian Biofuels Production and Consumption 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Ethanol (Million Gallons) Production 279 302 310 323 336 351 366 388 410 433 455 Consumption 450 496 530 558 589 617 643 669 700 730 763 Net Trade -171 -194 -220 -236 -253 -266 -277 -281 -290 -297 -308 Feedstock in Ethanol Production (Thousand Metric Tons) Wheat 868 935 955 989 1,025 1,065 1,106 1,165 1,224 1,286 1,345 Corn 2,017 2,177 2,230 2,315 2,406 2,504 2,607 2,753 2,900 3,052 3,200 

# Chinese Biofuels Production and Consumption 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Ethanol (Million Gallons) Production 542 563 575 594 611 630 649 671 691 712 731 Consumption 508 526 551 571 594 618 642 665 691 717 745 Net Trade 35 37 23 23 17 11 7 6 0 -5 -13 Feedstock in Ethanol Production (Thousand Metric Tons) Wheat 1,643 1,695 1,723 1,770 1,813 1,858 1,906 1,960 2,008 2,058 2,105 Corn 3,911 4,046 4,122 4,246 4,359 4,478 4,603 4,745 4,873 5,006 5,131 

# European Union Biofuels Production and Consumption 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Ethanol (Million Gallons) Production 803 990 1,073 1,171 1,256 1,351 1,450 1,546 1,641 1,737 1,826 Consumption 1,082 1,304 1,446 1,577 1,713 1,842 1,967 2,092 2,222 2,350 2,481 Net Trade -279 -315 -373 -407 -457 -491 -517 -546 -581 -613 -655 Feedstock in Ethanol Production (Thousand Metric Tons) Wheat 3,900 4,864 5,305 5,826 6,197 6,647 7,108 7,487 7,962 8,414 8,736 Corn 1,800 2,440 2,598 2,810 2,994 3,188 3,420 3,659 3,853 4,056 4,229 Barley 500 749 796 856 916 983 1,047 1,108 1,161 1,223 1,296 Sugar Beet 9,240 11,963 12,891 13,820 14,896 15,962 17,002 18,170 19,082 20,045 21,265 Other 261 261 261 261 261 261 261 261 261 261 261 Biodiesel (Million Gallons) Production 2,477 2,612 2,840 2,888 2,940 3,002 3,082 3,151 3,265 3,371 3,471 Consumption 2,867 2,883 3,175 3,270 3,361 3,447 3,536 3,612 3,752 3,892 4,032 Net Trade -375 -269 -333 -380 -419 -443 -452 -460 -485 -519 -559 Feedstock in Biodiesel Production (Thousand Metric Tons) Rapeseed Oil 5,994 6,478 7,074 7,227 7,394 7,640 7,857 8,036 8,323 8,593 8,853 Soybean Oil 1,070 1,044 1,138 1,150 1,170 1,194 1,223 1,249 1,293 1,333 1,370 Sunflower Oil 311 326 354 361 367 375 385 393 409 424 438 

# Indian Biofuels Production and Consumption 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Ethanol (Million Gallons) Production 298 419 450 476 497 519 542 568 590 614 635 Consumption 473 505 537 556 577 598 618 637 659 679 702 Net Trade -53 -91 -89 -89 -88 -87 -86 -80 -78 -75 -76

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# Indonesian Biofuels Production and Consumption 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Biodiesel (Million Gallons) Production 24 25 26 28 30 33 36 40 46 53 62 Consumption 354444444 5 5 Net Trade 21 20 22 24 26 28 32 36 41 48 58 Feedstock in Biodiesel Production (Thousand Metric Tons) Palm Oil 84 87 92 98 105 114 126 140 159 184 217 

# Japanese Biofuels Production and Consumption 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Ethanol (Million Gallons) Net Trade -137 -149 -162 -172 -183 -194 -204 -213 -223 -233 -244 Biodiesel Net Trade -17 -17 -15 -15 -15 -15 -15 -15 -15 -14 -13 

# South Korean Biofuels Production and Consumption 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Ethanol (Million Gallons) Net Trade -85 -100 -116 -127 -138 -149 -160 -170 -180 -191 -202 

# Malaysian Biofuels Production and Consumption 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Biodiesel (Million Gallons) Production 76 92 103 109 114 116 117 118 119 119 119 Consumption 18 18 18 18 18 19 19 20 20 20 20 Net Trade 58 74 85 91 95 97 98 98 99 99 99 Feedstock in Biodiesel Production (Thousand Metric Tons) Palm Oil 265 322 359 382 397 405 409 412 414 416 417 

# Rest-of-World Biofuels Production and Consumption 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Ethanol (Million Gallons) Net Trade -75 -85 -97 -107 -118 -128 -139 -149 -159 -170 -180 Biodiesel Net Trade -174 -35 -34 -34 -33 -33 -33 -32 -31 -30 -30