January 29, 2015

29/01/2015: UK lifts hopes for grain use by ethanol plants

Improved fortunes at the UK's bioethanol plants prompted UK farm officials to trim their estimate for the UK's exportable surplus of wheat this season –although it remains at a six-year high, Agrimoney.com reports.

Defra, the UK farm ministry, pegged lifted its estimate for domestic consumption of wheat for food and industrial uses in 2014-15 by 182,000 tonnes to a record 7.99m tonnes.


The upgrade, to a level 570,000 tonnes higher year on year, reflected increased expectations for use of the grain by the UK's two major bioethanol plants – the CropEnergies site, formerly known as Ensus, in north east England, and the nearby Vivergo site, backed by investors including Associated British Foods, BP and DuPont.

The sites, between them, have capacity to process some 2m tonnes of wheat a year, although have historically operated well below that level.

"Demand from the UK's bioethanol plants has so far exceeded previous levels, and more than offsets lower usage by millers," said the HGCA crop bureau, which is consulted by Defra in drawing up the data.

The comment chimes with a statement by CropEnergies, announcing a 20 percent jump to 299,000 cubic metres in ethanol production in the September-to-November quarter, that the growth was "mainly due to better utilisation of the plant in Wilton, after it initially started operating with reduced capacity utilisation" in autumn 2013.

However, the HGCA cautioned that the drop in oil prices had raised a question mark over the ability of the plants to keep up output for the rest of 2014-15, which ends in June.

"The recent fall of energy prices makes the forecasting of usage uncertain," the bureau said.

CropEnergies said two weeks ago that, EU-wide, ethanol use is expected to rise by 0.9 percent this year, after a drop of 2.5 percent to 5.3m cubic metres in 2014.

In fact, CropEnergies has at Wilton been using a high proportion of corn in its feedstock mix, sources have told Agrimoney.com, putting the figure at 50:50 with wheat.

Defra also raised by 231,000 tonnes to 1.36m tones its estimate for UK corn imports this season.

"The discount of corn prices is not as big as it was. But compared with the likes of lower protein wheat, corn is still better value in terms of starch yield," said Richard Whitlock, HGCA board member, and grains and ethanol consultant.

Wilton is believed to be about to see a scheduled shutdown.

"It looks as if the Teesside ethanol plant [Wilton] will be closing down for some lengthy maintenance at the end of the month with no indication when it will reopen," traders at a major European commodities house said.

Defra trimmed by 21,000 tonnes to 3.46m tonnes its estimate of the UK's exportable surplus of wheat in 2014-15 – a reflection of a bumper harvest and a strong pace of imports early in the season.

The extent of the surplus, the highest since the 3.52m-tonne excess in 2008-09, has raised concerns of the UK being left with a large amount of unshipped grain at the end of the season, in theory at negative for prices.

Exports have so far lagged well behind the pace needed to avoid hefty carry-out inventories.

"There are some feed wheat sales being made out of the deep water ports but still not enough," said the commodities house traders.

"The small coaster ports have been disadvantaged by the weak euro, but we still need to see more wheat leaving from these facilities to reach the export target for the season.

"The deep water ports do not have the capacity to do it all."

Read more HERE.

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