Recently, Martin Fraguio, CEO of the Argentine Corn Industry Association (Maizar), said that Argentine corn ethanol producers are preparing to increase production by as much as 60%, depending on how much the government will increase the blending rate of ethanol in gasoline.
In April this year, the Argentine government increased the blending rate of ethanol by 2% to 12%. This will help boost domestic sugar demand. Due to the low international sugar price, it has been impacting the domestic sugar industry. The Argentine government plans to increase the ethanol blending rate again, but no targets have yet been set.
It may be difficult for Argentine sugar producers to continue to increase ethanol production, while corn growers will increase corn plantings for 2016/17, as President Markley canceled corn export tariffs and quotas after taking office. He said that the further increase in ethanol production can only come from corn. The highest ethanol production in Argentina"s sugar industry this year could reach 490,000 cubic meters, up from 328,000 cubic meters last year.
At the same time, corn production will increase substantially. Fraguio expects that Mark"s policy will eventually boost corn plantings from the current 4.2 million hectares to 6.2 million hectares. He said that there are currently three corn ethanol plants in Argentina, and plans to expand production capacity. The three plants currently have an annual production capacity of 100,000 cubic meters. He added that as long as the government announces further increases in ethanol blending, it will be possible to build a factory in six to ten months. The new plant will cost as much as $500 million, which will increase Argentina"s annual ethanol production by 60% from the current 507,000 cubic meters.
Once the capacity of the three new plants is put into production, it will require 700,000 tons of corn. At present, the corn demand in the corn ethanol industry in Argentina is about 1.2 million tons.
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