Europe's largest wheat
ethanol plant is to mothball its operations, in what is
believed to be a response to high wheat prices, in
another setback to the nascent biofuels segment, Agrimoney.com
has learned.
The UK's Ensus plant is,
as of next month, to shut capacity temporarily, sources said,
a move believed to be in response to wheat prices which
hit a record £222.00 a tonne on the London futures market last
month.
The plant is, to
facilitate the shutdown, accelerating delivery of wheat
ordered into June and July, traders said.
Meanwhile, buyers of
distillers' grains, a byproduct of ethanol manufacture used as
a livestock feed, are seeking supplies of alternative raw
materials.
A shutdown could
enable the site to tap into newly harvested supplies being
offered for lower prices. London's new-crop November lot was
trading $173.50 a tonne in late deals in London, a discount of
nearly 15% to the expiring May contract.
Representatives of the
Ensus plant have yet to confirm or deny the shutdown to
Agrimoney.com. Glencore Grain, which is responsible for the
site's wheat supplies, referred calls to
Ensus.
Sector
setbacks
Closure would represent a
further hiccup for a UK wheat ethanol industry which has
already been dented by building delays, at both the Ensus
site, whose construction was held up by industrial action, and
the Vivergo plant being developed by Associated British Foods,
BP and DuPont.
Completion of the Vivergo
site is being delayed by a bitter dispute workers laid off in
March, after the site terminated a contract with an
engineering group.
Ensus has also been
ordered by UK environmental watchdogs to install equipment to
tackle odours which have prompted complaints from neighbours
to the site.
Supplies freed
up?
As talk of the
shutdown spread, Glasson Fertilizers, part of the listed
Wynnstay Group, said on Twitter that the move
would "add to UK ending stocks, taking the pressure of the
market".
Traders have long
pondered how pressure on UK wheat supplies, following a spurt
in exports in the first half of the 2010-11
marketing year, would play out towards the end of season,
which ends next month.
Grain merchant Gleadell
said in a market report: "We hear rumours that the Ensus
bioethanol plant is to be mothballed for an undefined period
of time.
"If true this will boost
the UK's exportable [wheat] surplus for
2011-12."
At Nogger's
Blog, agriculture commentator Dave Norris said:
"It
would seem that with UK wheat prices now at well over £200 a
tonne. the economics of the equation of turning food into fuel
clearly don't currently stack
up."
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