Brazilian ethanol exports to U.S. likely to grow - Datagro

SERTAOZINHO, Brazil Aug 29 (Reuters) - Exports of Brazilian ethanol to the U.S. market are likely to grow, while still allowing Brazil to increase its blend of the biofuel in gasoline in early 2013, local sugar and ethanol analyst Datagro said.

Brazilian exports of ethanol surged in July to 410 million liters, most of it going to the United States, according to Brazil's Trade Ministry. In previous months, exports were between 140 million and 64 million liters a month.

"This particular increase in July is a seasonal phenomenon," Datagro President Plinio Nastari said on the sidelines of a seminar that opened the Fenasucro sugar and ethanol industry fair in Sertaozinho, in the center of the world's biggest cane belt.

Brazil has been trying to reverse falling yields from its cane crop. The lower yields have limited the output of ethanol fuel. This has left the fuels market short and driven up prices.

Drivers of flex-fuel cars are opting for gasoline, which is a better buy than ethanol. As a consequence, the state oil company Petrobras has been turning to the international gasoline markets to make up for its own refining deficit in the petroleum derivative.

Petrobras is importing 100,000 liters of gasoline a day. And unless fundamentals for ethanol production improve, analysts estimate this will grow to 300,000 liters a day by 2020. The lack of infrastructure for that level of imports could cause shortages on the local market.

Brazil's center-south cane belt, which accounts for 90 percent of national sugar and ethanol output, is just past the half-way point of crushing a 510 million tonne crop, according to market forecasts.

Nastari said Datagro is revising its estimate of the crop, which stands at 499 million tonnes. The rains in May and June will potentially help the 2013 cane crop output, but a very dry August will keep the estimate from rising much this season, he said.

"Brazil will export more ethanol to the United States due to the drought there, but there will still be room to raise the ethanol blend (here) in April 2013," Nastari said.

Brazil reduced its ethanol blend in gasoline to 20 percent from 25 percent last October after drought and falling yields reduced the supply of ethanol. Currently, ethanol prices are lower in Brazil than in the United States, and mills are losing money from their ethanol operations.

Raising the blend back to the maximum of 25 percent in gasoline would relieve Petrobras of roughly 40 percent of its gasoline import needs and might improve mills' earnings from ethanol production.

Analysts estimate Petrobras is losing about 40 centavos ($0.20) per liter of gasoline that it imports, due to the government-controlled domestic price of gasoline being lower than the international price. (Reporting by Reese Ewing; editing by John Wallace)