According to a Green Plains Inc (NASDAQ:GPRE) executive, the ethanol industry in the United States will export at least 1.1 billion gallons of the biofuel this year even with China out of the equation. In the first quarter of 2017, the ethanol manufacturer expects the industry to export over 300 million gallons. Some of the top export markets for ethanol from the United States include The Philippines and India.
Exports to constitute 25% of production
Todd Becker, the president and chief executive officer of Green Plains, also disclosed that the ethanol manufacturer would export a quarter of its production this February. This was during an earnings call in which the company reported a profitable fourth quarter. Green Plains also recorded a 21% increase in the amount of ethanol it produced.
“Each of our business units performed well during the quarter and the year, delivering strong results by continuing to focus on executing our long-term strategy of diversification and achieving scale in all of our businesses,” said Becker.
Regarding the diversification plans of Green Plains, some of the targets that the ethanol manufacturer has been eyeing are food ingredient businesses. This will not only enable Green Plains to reduce its dependency on ethanol but will also allow the company to move into businesses that enjoy higher margins as well as experience lower volatility.
Increased levels of ethanol stocks
On the fact that the level of ethanol stocks are higher this time compared to last year, the CEO of Green Plains explained that the increased demand means that the stocks last for a shorter period of time compared to last year. Historically, ethanol stocks build up during winter as the market prepares to handle strong demand in summer when the warm weather tends to lower the supply.
With regards to the domestic demand, over 14 billion gallons of ethanol would be required in the United States in order to meet demand from gasoline blending.