To: Maurice Winn who wrote (6280 ) 5/11/2006 3:52:51 PM From: elmatador Respond to of 220194 Brazilian ethanol market excited by possible US tariff Thursday, May 11, 2006, 1:27 PM ELMAT: Just cut the tariff. We'l solve the problem :-) by Lane McConnell Talk from traders on Brazil’s ethanol market about a potential reduction in United States ethanol import tariff has driven local ethanol futures up on speculation. In addition, local ethanol prices have stabilized somewhat, even with growing supplies of the cane based biofuel from the new 2006 – 2007 harvest entering the market. "The big news this week is that all the millers are now waiting for a possible reduction in the U.S. ethanol import tax," said Luis Gustavo Junqueira Figueiredo, in a story from the Dow Jones Newswire. "Though the volume of exports shouldn't change significantly, millers expect that this could help stop prices on the domestic market from falling under 1 Brazilian real per liter, and that might also push up ethanol export prices, maybe to $550 or even $600 (per cubic meter)." A 54 cent per gallon duty is imposed by the U.S. on direct ethanol imports, but there are bills that have been introduced to the U.S. Congress to lower that tariff. The bills have been created to combat the rising gasoline prices and President George is also supportive of a tariff reduction. According to wire reports, due to that recent news the prices for both anhydrous and hydrous ethanol at the Sao Paulo mill gate reversed a downward trend and stayed level this week. Other traders have been reported as saying that a temporary jump in ethanol prices by three and four percent this week compared to last week. The June contract on Wednesday closed at BRL1020 ($498) per cubic meter, up 5.2 percent from the BRL969.17 ($468) close a week ago, while the August contract rose 2.8 percent to BRL1028 ($501). Already the U.S. has imported 306 million liters of ethanol from Brazil in 2006, according to data from the Agricultural Ministry. Brazil is the world's number two ethanol producer after the U.S., but the number one ethanol exporter.