Mexican buyers are interested in U.S. ethanol – even when U.S. buyers aren’t! Mexican purchases of U.S. ethanol have increased 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 the 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).
The U.S. Grains Council, of which Illinois Corn Marketing Board is a supporter, continues 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 a team of Mexican fuel buyers and policymakers to attend the international buyers program during the National Ethanol Conference last week in New Orleans, Louisiana.
Illinois Corn staff was there too, trying to understand more about how U.S. ethanol can develop a vibrant export market which will help to buoy U.S. corn prices and improve farmer profitability. Illinois is a natural fit to export ethanol with its position on the Illinois and Mississippi Rivers.