SAO PAULO (Dow Jones)--Due to feverish U.S. demand for Brazilian ethanol, Brazil's main sugarcane-producing center-south region shipped out a record 428 million liters of ethanol in June, if not more, and the region is likely to accelerate its exports to 1.5 billion liters by September, said the Sao Paulo sugarcane industry association, or Unica, on Friday.
The association now expects to revise up its 2006-07 ethanol export estimates sometime this month from its May forecast of 1.9 billion liters, said Antonio de Padua Rodrigues, Unica's technical director, in a telephone interview with Dow Jones Newswires.
"I think it's possible that we'll export 2.5 billion liters this season, even if the U.S. stops buying ethanol after September," he said. However, Rodrigues added that the region might not be able to ship out 3 billion liters, as some traders and millers have suggested in recent weeks.
In June, most of the region's exports went to the U.S., which has been snapping up large volumes of Brazilian ethanol this season, due to the elimination in May of the country's use of gasoline additive MTBE, a known ground water contaminant.
"I'd say that U.S. demand accounted for over 80% of shipments in June, while direct shipments to the U.S. accounted for over 60%," said Rodrigues. "Exports will be strong until at least September, due to this demand."
By contrast, last year, Brazil shipped out about 300-plus million liters of ethanol, and a total of 1.9 billion liters during the harvest year from May to April, Rodrigues said. The U.S. imposes no duties on ethanol shipped via the Caribbean and a hefty 54-cent-per-gallon tariff on direct ethanol imports.
Despite these duties, direct imports of Brazilian ethanol have been attractive to U.S. refineries this year, as the U.S. prices of locally made corn-based ethanol have skyrocketed. Unica's estimate for June exports starkly contradicts export registration data compiled by the Trade Ministry and released by the Agricultural Ministry on Thursday, which pegged June ethanol exports at roughly 166 million liters, 38% lower than the roughly 268 million liters registered to be shipped out in the same period last year.
"I'm not sure why there's such a big discrepancy in the numbers this time around, perhaps it was due to a strike at the export license division," said Rodrigues. "The data I have right now is that ethanol shipments hit 428 million liters in June, but I think it will be higher than this. We're still compiling the final numbers."
While no one at the Agricultural Ministry on Friday was available to comment, a Trade Ministry spokeswoman said that there was a small chance that a two-month strike by the Federal Brazilian Tax Authority, which partly oversees export license registrations, had affected data collection. The strike ended Friday.
Nevertheless, "it's impossible that there could be an error in the system, since these numbers are official government numbers and consequently are right," the spokeswoman said, adding that ethanol trade data for June wouldn't be revised. Rodrigues said that Unica wasn't wrong. "The mills passed me the information, then I went to the ports to check on the ships, as they were in the middle of loading," he said.
"Ethanol tankers are very big, they can't be hidden." Brazil is the world's No. 1 sugar producer and exporter as well as the leading cane ethanol producer and exporter. Brazil's center-south region accounts for over 85% of the country's total sugarcane output.