The era of rising European Union production of biofuels based on food crops is over, with concerns over competition for land providing a final blow, echoing ideas of a slowdown in the US too.
In biodiesel, of which the EU is the world's top producer, "the years of rapid expansion in production capacity seem to be over", US Department of Agriculture staff said, with output wet to stabilise at 10.3m litres per year this year and in 2014, below the peak of 10.9m litres set two years ago.
And in bioethanol, a rise in production expected this year and in 2014, driven by the opening of the Vivergo plant in the UK and the restart of the nearby Ensus site, will prove a last hurrah.
"New investments in first generation production capacity are not likely," the USDA staff said in a report.
The comments represent another blow to the conventional biofuel sector after the US Environmental Protection Agency earlier this month signalled a less tough stance on ethanol use edmand, opening the door for an end to rising mandated use for the first time in at least eight years.
"We view it most likely that the EPA will propose holding the 2014 renewable fuel mandate at 2013 levels of 13.8bn gallons," 600m gallons below the existing figure," Paul Deane, senior ag economist at Australia & New Zealand Bank, said.
On that basis, "USDA 2013-14 corn demand forecasts for ethanol production are likely to be modestly overstated," leaving US corn stocks at the close of the season "higher than anticipated".
The bank estimated US use of corn in ethanol at 4.8bn bushels for 2013-14, 100m bushels below the current USDA forecast – an estimate which excludes any impact from a US government move to dispose of some of its sugar stockpiles to the ethanol industry too.
"The consensus is that corn usage could be reduced by 50m-70m bushels as result of this action," Brian Henry at Benson Quinn Commodities said.
However, the bioethanol industry in Brazil remains in good health, underpinned by lower prices of sugar, also made from cane, and government measures to encourage consumption.
The worsened prospects for the European industry reflect in part market conditions, with "difficult market conditions" in biodiesel thanks to elevated prices of vegetable oils, the traditional feedstock, and competition from second-generation product made from waste fats.
In bioethanol, some plants have been "only able to make a profit due to the returns on distillers' dried grains", a feed ingredient manufactured as a byproduct, while others, such as the UK Ensus plant, have spent long spells mothballed.
Demand growth in biofuels has also waned, thanks in part to economic malaise and increasing vehicle fuel economy.
However, the USDA report also highlighted reduced political willingness to support conventional biofuels, which use crops such as rapeseed and wheat, over so-called "second generation" alternatives using industrial waste or non-food farm products, such as straw.
The European Commission has proposed capping at 5% the proportion of first-generation biofuels used, as a proportion of total fuels use, roughly the current level.
The report flagged "political pressure against biofuels" from the likes of pressure groups and politicians based on the "fear that agricultural or pasture land, previously used for food and feed production, could be diverted to the production of biofuel", besides potential destruction of forestry for growing fuel crops.
Some individual governments have already taken action, with Spain cutting minimum blending obligations of biofuels, and France last year revealing a "gradual end to public support for first generation-biofuels starting from 2014 and terminating December 31 2015".
However, the USDA staff foresaw the European Commission proving more generous on its biofuels cap, following heavy lobbying from farmers and biofuels groups.
"It is likely that decision makers will increase the limit to at least 8%to give the industry the possibility to recoup costs."