UK wheat prices look set to receive a further boost after plans to open a new bioethanol plant were announced this week.
The facility, to be built by energy firm Ensus at
The plant will require 1.2m tonnes of year, which is set to be supplied by grain merchants Glencore as part of a long-term deal.
Shell Trading, an arm of oil and gas giant Royal Dutch Shell, has signed a ten-year contract to buy the bioethanol produced.
The plant at
The Renewable Transport Fuels Obligation, introduced last year, will force fuel distributors to blend 5% biofuels with petroleum-based fuels by 2010.
Nick Oakhill of Glencore Grain said using 1.2m tonnes of the
“This year the
Reliance on the competitiveness of other European countries had depressed
As well as benefiting growers livestock producers would also benefit from a protein-rich animal feed produced by the plant as a by-product.
While farmers in the North-east would be well-placed to supply the plant with wheat, Mr Oakhill said Glencore would not be limited to sourcing
However, Alastair Dickie, HGCA director of crop marketing, said he did not expect to see
“Increasing domestic wheat consumption would move the market towards import parity, which could add £7-10/tonne,” he said.
Wheat prices could still be volatile, but they were unlikely to drop as low as they had been in recent years, he added.
Simon Ingle of Grainfarmers said the new plant would be positive for the wheat market, but scepticism over when biofuel plants would actually open meant prices would not move until plants start to take some of the
Forward prices for wheat were £83/t for November 2007 and £84/t for the following year. Further price increases depended on how much of the current tight global supply was replenished over the next season, he added.
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