'Uncertainty' over wheat use by UK ethanol plants

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.

Plant hiccups

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".

Back-door trade?

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 market.

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 ethanol.

Anti-dumping complaint

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.

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