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August 6, 2018

More Corn-based Ethanol to come online in Brazil

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Brazil's first corn-based ethanol facility was inaugurated 12 months ago and the company has already begun the process of doubling the capacity of the facility. The facility is operated by FS Bioenergia, which is a joint venture between the Summit Agricultural Group from the United States and Tapajos Participacoes from Brazil.

The facility is located in the city of Lucas do Rio Verde in central Mato Grosso and it has an installed capacity to process 650,000 tons of corn per year into 250 million liters of ethanol. During the first year of operation, it took several months to get the plant up to its maximum efficiency. The president of the company indicated that the technology, which was transferred from the U.S., needed to be modified a little in order to adjust to the tropical environment of Mato Grosso.

FS Bioenergia indicated to Reuters that they are investing R$ 350 in order to double the capacity of the facility (approximately US$ 92 million). The expansion of the facility should be completed by February of 2019. I have visited the facility twice, once before it opened in June of 2017 and then again in April of 2018. When we visited in April of this year, construction was already underway on the expansion project.

The company has also announced they will build a second corn-based ethanol facility in the city of Sorriso, which is right up Highway BR-163 in central Mato Grosso from their facility in Lucas do Rio Verde. They are in the final stages of obtaining the necessary licenses and they hope to start construction before the end of the year. The construction will take approximately 16 months. When the two facilities are operational, they will have the combined capacity of producing 1.2 billion liters of ethanol, 900,000 tons of DDGs, and 35,000 tons of corn oil annually.

In an effort to insure adequate supplies of corn for their two facilities, FS Bioenergia is launching a program to help corn producers in the state increase their corn yields. The company will be sending out teams of agronomists to identify the best production practices for the various regions of the state. They feel that increasing the corn productivity will be good for both producers and the company.

Corn prices in Mato Grosso are 56% higher this year compared to last year when the state produced a record large corn crop. The president of the company indicated that they sourced much of their needed corn last year when prices were much more reasonable. But, in order to insure adequate supplies of corn in the future at reasonable prices, the company want to work with farmers in increase their corn productivity. Currently, the estimated yield for the 2017/18 safrinha corn crop in the state is 5,800 kg/ha or 89 bu/ac.

Corn-based ethanol production in Brazil is still in its infancy, but it is expanding. Currently, only 1.4% of Brazil's ethanol is derived from corn. In addition to the corn-based facility operated by FS Bioenergia, there are about a half of dozen sugar/ethanol mills that have been retrofitted in order to utilize corn to make ethanol when sugarcane is not available.