Buenos Aires, Jun 4th. The gap between ethanol from corn and corn prices since de assumption of President Macri’s Administration is perishing month by month. In November 2015, prior to the assumption, one liter of bioethanol from corn was equivalent to 6.6 kilograms of corn. Twenty-nine months later, the relationship was 1:3.4.

As we see in the following chart, in September 2014 bioethanol from corn reached its better relationship with its raw material: 1:9.3. It was the moment when investment in bioethanol production was in course. Currently, only five plants are producing the biofuel in the country: Vicentin at Santa Fe Province; Promaíz, ACABio, and Bio4 at Cordoba Province, and Diaser at San Luis Province. During 2017 this five companies produced 551,964 m3 which were destined to the mandatory blend with gasoline.

 

Chart: Relationship between bioethanol (for mandatory blending) and corn prices

Source: RIA Consultores on Energy and Mining Ministry data

 

Along 2017, Macri’s Administration carried out a revision of the bioethanol prices and its industrial costs, concluding that it was necessary to down the final price. Now, not only the industry has a worse relationship with corn, but with dollar too. Until October 2014 there was a close relationship between one liter of bioethanol and a dollar. Former minister of Economy during last administration, Axel Kicillof, decided to split bioethanol prices from sugar cane from the corn.

As we see in the next chart, the gap between dollar and bioethanol from corn increased over time. During 2016 the average price was US$0.76 per liter. Next year it was US$0.79. But in the first 2018 half-year, it plunged to US$0.61.

 

Chart: Evolution of dollar and bioethanol from corn in AR$

Source: RIA Consultores on Energy and Mining Ministry data

 

Bioethanol industry is concerned about the current situation, despite during first quarter of 2018 production was increased 7.7% respect the last year to 145.555 cubic meters. But new investments are frozen due to this unpredictable regulatory framework.