Biofuel production has stepped up another gear in the USA, with two big new factories coming on stream this month and the government pouring another $97m (£49m) into projects designed to expand capacity.

The latest plant is owned by Louis Dreyfus in Claypool, Indiana, and has an annual capacity of 88m gallons (400m litres) of biodiesel. It was opened last week, just a few days after Imperium Renewables opened the USA's largest biodiesel plant, a 100m gallon (455m-litre) facility at Grays Harbour, Washington.

"The US biodiesel industry is committed to enhancing America's energy independence by replacing foreign oil with environmentally friendly, domestically-produced renewable fuels," said Manning Feraci, of the National Biodiesel Board.

There are now 150 biodiesel plants operating in the USA, with an average capacity of 9.5m gallons a year (43m litres), and another 95 are under construction. Domestic production has risen tenfold in the past three years and is expected to exceed 300m gallons (1.36bn litres) this year.

Similar rapid growth has been seen in the bioethanol sector, with 130 plants now up and running, with an annual capacity of 6.4bn gallons (29bn litres). According to the American Farm Bureau Federation, there are another 98 plants under construction, which will add 7.7bn gallons (35bn litres) to output.

The growing demand for grains and oilseeds to supply these biofuel plants continues to be felt in the commodity markets. AFBF economist Jennifer DuMars estimates that ethanol plants will use a total of 3.5bn bushels (88m tonnes) of maize this season, getting on for a quarter of all output.

This is a main factor behind the recent hike in global grain prices, which is putting pressure on livestock feed costs on both sides of the Atlantic.

Despite this, Washington continues to encourage continued expansion of renewable energy production, with $97m (£49m) just committed in loan guarantees to help four firms develop new biofuel plants in Georgia, Illinois and North Carolina.

"These funds are part of the US department of agriculture's on­going commitment to bring greater economic opportunities to rural citizens," said agriculture secretary Mike Johanns.

Expansion of the US biofuels sector will keep fuelling commodity prices.