U.S. 2011 ethanol exports seen at 500 mln gallons: CHS

SAO PAULO, Brazil Thu Mar 31, 2011 2:58am EDT

SAO PAULO, Brazil (Reuters) - U.S. ethanol exports in 2011 should surpass last year's record high as the fuel remains relatively cheaper than Brazilian cane-based ethanol in external markets, a director at the largest U.S. farm co-op, CHS, said on Wednesday.

Shipments are expected to total at least 500 million gallons (1.9 billion liters), up from 400 million in 2010, with no less than 200 million gallons going to Europe, said John Litterio, director of renewable fuels sales at CHS.

"U.S. has excess capacity at least in the next few years to dedicate to international markets," he said on the sidelines of a F.O. Licht sugar and ethanol seminar.

U.S. shipments in 2010 were four times bigger than in the previous year as the corn-based fuel gained space in markets that had been supplied traditionally by Brazil, where ethanol prices were boosted by tight supplies and red hot demand.

Although analysts and industry officials expect Brazil to regain competitiveness at some point, possibly in 2012, Litterio said the increase in North American shipments put the U.S. industry "in the next level."

"The U.S. has got to understand that they can play in a bigger way in the global markets," Litterio said.

According to CHS, U.S. production capacity in the United States exceeds the 2011 mandated demand by over 1 billion gallons.

Traders expect total Brazil ethanol shipments in 2011/12 (April-March) to be roughly unchanged from the previous season at around 1.5 billion liters, after reaching over 4 billion liters in previous years. Brazil's output in 2010/11 totaled about 28.4 billion liters.

Besides losing international market share to U.S. ethanol, especially in Europe, Brazil even imported the biofuel from the U.S. market.

Volumes have been estimated at 200 million liters since the beginning of the year, with arrivals expected to happen until April, when harvesting of the new crop gains pace and prices should ease, pricing new imports out of the local market.

Hydrous ethanol, which is used in Brazil to power flex-fuel cars, was traded on Wednesday at 1,650 reais ($1,000) per cubic meter (1,000 liters) at the mill gate, down from about 2,000 reais a week before, according to Rio-based Ecoflex brokerage.

Prices have been at five-year highs, pressured by high sugar prices and a lower-than-expected output in 2010/11.

CHS, which trades over 650 million gallons per year of ethanol, estimates demand for the fuel through 2015 will grow by close to 50 percent to 32.9 billion gallons per year, with Brazil and the United States continuing to provide over 80 percent of the global supply.

Christoph Berg, managing director of F.O.Licht analysts, agrees that U.S. ethanol exports will remain high this year, but said shipments in 2012 will depend on local demand and the spread of a higher E15 blend with gasoline in the U.S. market.

(Editing by Lisa Shumaker)

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