Wheat export ban by India- How will it affect overall Ethanol market
- 19-May-2022 1:54 PM
- Journalist: S. Jayavikraman
New Delhi, India- The prices of Ethanol accelerated during the previous week on the grounds of rising feedstock prices. In the last few months, turbulence in the prices of all food commodities has been witnessed in the global market owing to the ongoing severe war between Russia and Ukraine, which showcased its bizarre effects and has raised the prices of wheat, corn, and other commodities. Ethanol production requires the fermentation of starchy commodities, and corn and wheat are the primary substitutes to produce Ethanol. As a ripple effect, Ethanol prices enlarged in the Asian market as wheat; corn is the primary element required to produce Ethanol.
India's Wholesale Price (WPI) index inflated the previous week, putting the government and the consumers in turmoil. The swing in wheat and corn prices created a hurdle between the end-use consumers and supplying manufacturers. To cater to the strong offtakes from individuals and fill the gap, the government of India has come up with a solution. But the central question which arises here is, how effective will this step be, and how will it impact the Biodiesel market position?
India has restricted items of wheat-producing results from May 13, alluding to a bet on food security, essentially on account of the contention in Ukraine. Furthermore, the soaring energy prices have led to the high local production cost of Biodiesel. According to the ChemAnalyst resources, the burgeoning feed prices will proportionally affect ethanol production. India has a target of achieving the E20 target, fuel consisting of 20 percent ethanol and 80 percent of petrol. This step reduces the dependency on fuels and cuts down the carbon emission from vehicles.
Further, he added that attaining this goal may get delayed as the government has a mouth to fill, and continuous brisking prices of wheat make it complicated. Also, the shortage of feed for ethanol production will surge the prices of Ethanol in the South-Asian market.
Moving the attention to the South American countries, the Brazilian government will no longer export sugar to the overseas market. This stride has been taken to divert the attention toward increasing ethanol production in the domestic market. These facets might play a significant role in escalating Ethanol prices in the global market.
As per ChemAnalyst, “The market for Ethanol may continue to oscillate in the upcoming weeks due to rising feed prices. The demand for wheat and corn as a food commodity from individuals will increase, creating a feed shortage with significant ethanol producers, consequently affecting the Ethanol market.”