2012 another consolidation year for world ethanol market

The world ethanol engine continues to sputter. The rebound in world production in 2012 is likely to be very modest, if there is any growth at all. Of decisive importance for the development at the global level will be the situation in Brazil. This country had already been responsible for last year's drop in world production and now it will be critical how strong the recovery in Brazil will be in 2012. The renewed focus on Brazil is the result of the weakness of the US ethanol industry where output is likely to fall for the first time since 1996. Additional impulses from other parts of the world are unlikely to materialise to the extent needed in order to lift the industry out of its current stagnation. Of course, there will be growth in Europe and Asia but the numbers involved are too small to really make a difference at the global level. This bearish outlook is quite surprising given the positive fundamentals.