Brazil's Imports Of U.S. Corn Ethanol Surge (CORN, FUE)
Brazilian ethanol, which is made from sugarcane, has traditionally been one of the cheapest sources of biofuels around. However, according to the U.S. commerce department, Brazil imported nearly 70 million liters of corn-based US ethanol in 2010, up from just 1 million in 2009. The surge in ethanol imports expose disappointing Brazilian production and overall rising fuel consumption. The majority of cars and light trucks in the nation operate on a fuel that is a blend of ethanol and gasoline. In addition, “flex-fuel” vehicles are gaining in popularity within the nation. The biggest reason for the increase could be the Brazilian real's rise against the U.S. dollar. The falling greenback has made U.S. exports more desirable to foreign nations.
The U.S. corn ethanol industry, which has been criticized by both environmentalists and free-market economists, could be reaching a point where producers can compete without state subsidies. The U.S. is now the world's second-largest ethanol exporter, selling to the Middle East, Europe and Canada.
For those investors looking to cash in on the United States' new found prominence in the ethanol world can mean only one thing: corn. The Teucrium Corn (NASDAQ: CORN) allows investors to bet on rising corn prices and consumption. The ETF makes an interesting play on the rise of U.S. ethanol exports. In addition, for those who want to bet on the overall growth of biofuels, the ELEMENTS MLCX Biofuels Index ETN (NYSE: FUE) can be used as well.
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