The UK's stop-start bioethanol industry was rated as a "large
uncertainty" for wheat demand, after officials cut their forecast for
consumption of the grain by biofuel plants, amid complaints of unfair imports
of US supplies.
The UK farm ministry, Defra, cut by 307,000 tonnes to 7.50m
tonnes its forecast for industrial and food use of wheat in 2013-14, despite higher
ideas of the use of the grain by the important distilling industry.
The downgrade reflected in part lower use in flour
production, thanks to a better quality UK harvest this year, but also to a drop
in use for bioethanol production, which "continues to be a large uncertainty
for demand", the HGCA crop bureau said.
"Commercial conditions and operational performance to date"
for the UK's two bioethanol plants, Ensus and Vivergo, two of the largest
biofuels plants in Europe, "support a lower forecast than that estimated in
November", the bureau said.
While the Defra report does not give detailed data on
consumption of wheat by ethanol plants, statistics for use by flour millers,
starch businesses and biofuel operations combined tumbled 17.1% to 1.86m tonnes
in the first 21 weeks of 2012-13 – the lowest for the period in at least five years.
And the HGCA comments tie in with talk that Ensus, bought by
CropEnergies last year, and Vivergo, backed by giants including Associated
British Foods and Dupont, in 2013 operated at a fraction of combined annual capacity, of approaching 2m tonnes.
The low rates of usage reflect in part high wheat prices for
much of last year, and engineering work, which for Vivergo has long delayed the
site's build to full capacity.
ABF said earlier this month that "production consistency has
improved at the Vivergo bioethanol plant in Hull and volumes have increased".
The economics of making ethanol have also been hurt by a ramp
up in exports to European Union countries, including the UK, from Norway – which
US biofuels group are suspected to be exploiting as a back door into the EU
While Norway is not a member of the union, it is a part of
the European Economic Area which enjoys favourable trade terms with EU nations,
including on bioethanol.
Although direct US bioethanol exports to the EU have tumbled
since the imposition of anti-dumping duties in February last year, those to
Norway have soared - making it one of the top destinations for US shippers, on
a par with Brazil, according to industry group ePure.
Norway has a population of 5.1m, compared with 201m for
Brazil, although the South American country is a major manufacturer of its own
Brussels-based ePure, which represents Europe's bioethanol industry,
on Wednesday complained to the European Commission over the imports from Norway,
which are being made at prices that are "significantly undercutting" those from
the bloc's own producers.
"We are urging EU authorities to extend the scope of the
established trade measures in order to stop this circumvention and prevent any
further injury to European fuel ethanol producers", said Rob Vierhout, the
ePure secretary general.