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Wheat prices firm but could ethanol price collapse hit northern biofuel plants?

In the last week, feed wheat delivered into Yorkshire (North Humberside) was reported at £160/t, placing the region at £13.35/t over the nearby futures contract.


Marianne   Curtis

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Marianne   Curtis
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According to AHDB, the delivered premium over futures into Yorkshire in April is now the highest in recent years. The premium has risen £4.85/t in the last eight weeks from £8.50/t in mid-January. The increasing premium may be partly due to the recent reopening of Yorkshire based bioethanol plant Vivergo restarting production, it says.

 

However, Gary Bright of Grainco says the premium is not particularly greater than it has been in the last six months and is now reducing due to imports from France and Denmark. “The main story is that Ensus has run all year giving it two profitable years.”


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Ethanol collapse

 

However, the recent collapse in ethanol prices could mean a ‘return to the bad old days’ where on every tonne of grain bought to produce ethanol, bioethanol plants are losing money, says Mr Bright.

 

AHDB also reports that prices for both East Anglia and the Avonrange are at greater than average premiums to nearby futures for this point in the season, reflecting tight overall UK supply and demand.

 

Premiums in the Avonrange to nearby futures in April are £1/t above the five-year average, due in part to feed wheat demand in the livestock sector, says AHDB, adding that March 2018 was the wettest in a decade and anecdotally has seen increased demand from the livestock sector nationwide.

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