Europe faced the prospect of annual wheat demand of more than 1m tonnes coming back onstream as the £300m Ensus ethanol plant confirmed speculation that it is to reopen.
The UK site, Europe's biggest biorefinery, said that it would restart later in August, 15 months after being mothballed in a move blamed on cheap imports of US ethanol.
The move, which comes four days after Agrimoney.com was told that "no formal decision" had been made on a restart, will bring some 100,000 tonnes a month of wheat consumption back online once full capacity is reached "within the next two months".
"Everyone is absolutely delighted that things are moving in the right direction once again and we are in a position to restart," Ensus chief executive Peter Sopp said.
'Improved conditions'
Ensus, whose ethanol is sold to Shell, said its decision followed an "improvement of market conditions" in Europe since the European Commission acted to close a loophole which allowed exporters, largely US, to export ethanol to the region at reduced tariffs.
By mixing ethanol with gasoline, it was imported as a chemical rather than a biofuel, which attract duties roughly three times as high in the UK, and even higher rates in countries such as France and Germany,
US ethanol has also lost export competitiveness thanks to the country's decision at the end of last year to allow a tax credit of $0.45 per gallon for blenders to lapse.
Meanwhile, US ethanol prices have been inflated by the surge to record highs in values of corn, the main feedstock for American plants.
UK-based sugar and ethanol consultancy Czarnikow last week, flagging "an increasing possibility" of Ensus restarting, highlighted that ethanol imports were "currently priced out" of the European market.
"Import margins into the European Union are now closed," Czarnikow said.
Poor harvest
The announcement comes amid prospects for a disappointing UK wheat harvest, thanks to persistent and heavy rains, although the poor weather could underpin supplies of the feed grain which Ensus uses in seeing downgrades of milling grain to lower grades.
UK grain traders, with links to Ensus, said last week that results from the UK harvest "so far have been variable with specific weights being very poor in many samples.
"This raises doubts about how much of the UK milling crop the millers will be able to use."
Meanwhile, UK demand for the grain is also set to be boosted later in the year by the opening of the Vivergo site, of a similar size to Ensus, which a spokesperson confirmed to Agrimoney.com on Tuesday is scheduled for opening in the October-to-December quarter.
The UK typically exports some 2.5m tonnes of wheat a year.
London wheat futures for November delivery stood 0.8% higher at £196.00 per tonne in lunchtime deals.
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