FAPRI predicts increased demand for E15, higher ethanol exports

By Erin Voegele | April 05, 2021

The University of Missouri’s Food and Agricultural Policy Research Institute in mid-March released its 2021 U.S. Agricultural Market Outlook, predicting an increase in demand for midlevel ethanol blends, a recovery in ethanol net returns, and increased exports over the next decade.

The report notes that the COVID-19 pandemic upended agricultural markets over the past year. Looking ahead, FAPRI said the outlook for agriculture “is uncertain, but certainly more optimistic than it was a few months ago.”

For ethanol, FAPRI predicts some recovery in motor fuel demand this year, but does not expect gasoline use to reach pre-pandemic levels through the 10-year projection period to 2030. The report, however, predicts that an expansion in midlevel ethanol blends, such as E15, will lead to slow but steady growth in domestic ethanol use.

FABRI also predict that a rebound in ethanol demand and the subsequent rise in rack prices will more than offset higher expected corn costs. “This leads to a recovery in ethanol net returns, which are projected to rise from [9 cents per gallon] in 2021 to [21 cents per gallon] in 2030,” according to the report.

The report also forecasts rising export demand for U.S. ethanol, which will drive production to levels higher than seen before the pandemic. FAPRI’s projections predict that U.S. ethanol production will increase to 16.7 billion gallons by 2030.

U.S. ethanol export levels are expected to recover slightly this year before returning to the 2018 record level of 1.7 billion gallons in 2022. As petroleum prices and global income increase, increased ethanol demand is expected to push exports to more than 2.25 billion gallons by 2030. Ethanol import levels are expected to remain low over the projection period as Renewable Fuel Standard requirements for advanced biofuels are expected to be met primarily with additional biomass-based diesel, according to FAPRI.

A full copy of FAPRI’s 2021 U.S. Agricultural Market Outlook can be downloaded from the University of Missouri website