BRAZIL: Put This Emerging-Market Tiger in Your Tank!

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BRAZIL: Put This Emerging-Market Tiger in Your Tank!

Post#1 » Thu May 29, 2008 2:38 am

Put This Emerging-Market Tiger in Your Tank!

Today's comment is by Mike Burnick, our Senior Editor, Director of
Research and investment mind behind Market Shock Trader.

Dear A-Letter Reader,

A month ago, I wrote an article here in the A-Letter detailing the global
food crisis. According to data from the World Bank, global food prices
have soared 83% in the past three years alone.

There's also another crisis brewing at the moment - that's becoming more
painfully obvious with each passing day: A global energy crisis! In many
ways, the two are closely connected...

U.S. corn-based ethanol production is a big reason why corn prices surged
56% higher in the past 12 months alone. About one-third of the entire U.S.
corn crop is being diverted from kitchen tables to gas tanks.

As a result, people are rioting in poor countries around the world.
They're taking to the streets in protest over U.S. corn-based ethanol.
They complain bitterly that we are trading THEIR food for OUR fuel. But
there is a better way...

In fact, there is an "emerging" alternative bio-fuel source that is a lot
more efficient than corn-based ethanol, and doesn't require the same food
vs. fuel trade-off.

In fact, Brazil is leading the great fuel revolution - with sugar
cane-based ethanol...

Brazil's Big Ethanol Advantage

Brazil is far and away the global leader in ethanol production technology.
In fact, the country began large-scale development of ethanol as an
alternative fuel source amid the oil shock of the late 1970's and early

Today, ethanol accounts for 50% of Brazil's total annual automotive fuel
consumption. More than 70% of new cars sold in the country are flex-fuel
capable. That means they're able to run either on gasoline, ethanol, or
some combination of the two.

Currently, Brazil is the world's second-largest ethanol producer, and
largest exporter, with total output of about six billion gallons a year.

The country has its sights set on becoming the dominant global exporter of
ethanol by 2020. Brazil's global ethanol exports could total as much as
200 billion gallons a year within that time - that's over 30-times today's
ethanol production. Talk about a growing industry!

U.S. and Europe Just Can't Compete with Brazilian Ethanol

CHART: ... image1.jpg

Brazil enjoys a big advantage over other nations - as the world's lowest
cost ethanol producer. As shown in the graph above, Brazil can distill
bio-fuels from sugar cane at a significant cost advantage to other

Neither U.S. corn-based ethanol, nor wheat-based ethanol from Europe, can
come close to matching the Brazilians on a production cost basis.

The sugarcane plant, which flourishes in Brazil's tropical climate,
produces a "yield" of 6,000 liters of ethanol per hectare of land. That's
about twice the yield of corn-based ethanol!

In fact, Brazilian ethanol is about 40% cheaper to make than in the U.S. -
and costs less than half the price of European ethanol.

When Trade Tariffs Fall, Brazilian Ethanol Will Flow

Of course Washington, in their infinite wisdom, maintains silly trade
tariffs equal to 54-cents a gallon on imported ethanol. This ridiculous
trade barrier benefits a relatively small number of U.S. corn farmers at
the expense of millions of American drivers.

In spite of this, Brazil's largest ethanol export market remains the
United States. In fact, Brazil shipped us more than 430 million gallons of
ethanol last year - up fourfold from 2004! Wholesale gasoline prices in
the U.S. are leaping above US$4 a gallon, and will keep spiraling higher
as crude oil goes through the roof during what's shaping up to be a long,
hot summer.

Naturally, pressure is mounting for Congress to eliminate this silly,
protectionist ethanol tariff. When that happens, the floodgates will open
wide for much-cheaper Brazilian ethanol to flow freely into U.S. markets.

By leveraging the strength of its vast sugarcane growing region, and
building on its already well-established ethanol producing technology,
Brazil is perfectly positioned to benefit.

In fact, this emerging market tiger could easily become the Saudi Arabia
of ethanol within the next decade. You heard it here first!

MIKE BURNICK, Senior Editor & Global Markets Analyst

P.S. Want to know more about the great fuel revolution - including the
alternatives that may be running your car within the next 10 years? Click
below to read my FREE special report to get all the details.

LINK: ... 1582185/0/

Posts: 1087

Post#2 » Fri May 30, 2008 6:03 pm

Hemp makes very good bio fuels. But, I think there are much better fuels than gasoline no matter how much is added.

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