LONDON — In the face of brakes applied by governments and the market itself, industrial use of grains, mainly for making fuel, was estimated to have increased 11% in 2008-09 over the previous year, with a further 6% rise in prospect for 2009-10. This analysis was issued by the International Grains Council in its most recent Grain Market Report published just ahead of this year’s I.G.C. Grains Conference held in London.
At the conference, the use of grains for making fuel, mainly for ethanol production in the United States, had the attention of several speakers. These views ranged from the declaration by a U.S. grain spokesperson that the fuel-versus-food issue no longer mattered in the context of market developments of recent months, to views from several countries that grains should not be used for making fuel in light of the expanding need for food among rising numbers of hungry people.
The expanding use of grains in industrial applications resulted in the I.G.C. emphasizing that industrial use has joined food and feed as what are now three important outlets for grain globally. The Council forecast industrial use of grains in 2009-10 at 255.7 million tonnes, compared with 241.8 million in the previous year, closing June 30, and 217.8 million in 2007-08. At the projected level for 2009-10, industrial use of grains represents 15% of expected global grain disappearance. The other major sectors of use were food at 606.6 million tonnes and feed at 748.6 million.
Of the industrial use of grains, ethanol alone accounts for 134 million tonnes, including 123 million used to make biofuels, against 111 million in 2008-09, and 11 million for non-fuel uses, such as potable alcohol.
So far as industrial use of the various grains is concerned, coarse grains, mainly corn or maize in the United States, accounted for most industrial use. For 2009-10, the I.G.C. forecast coarse grain use in industrial applications at 237.4 million tonnes, or 22% of aggregate usage of 1,092.8 million. In 2008-09, industrial use of coarse grains was 225.4 million tonnes, against 202.6 million in 2007-08. Industrial use of coarse grains broadened its margin over food use, forecast at 155.6 million, and was exceeded only by feeding, which was forecast to absorb 643.7 million tonnes in 2009-10.
In the case of wheat, industrial use was expanding, but still was a small part of global disappearance. The I.G.C. forecast wheat use industrially in 2009-10 at 18.4 million tonnes, up 12% from 16.5 million in 2008-09 and compared with 15.2 million in 2007-08. At the projected level for 2009-10, industrial use would account for less than 3% of total disappearance, forecast at 643.4 million.
According to the I.G.C., use of grains for making ethanol has slowed.
"The use of grains for ethanol manufacture, while substantial, is somewhat slower than in recent years, mainly because of a reduced pace of growth in the U.S. as foreseen under renewable fuel mandates to 2015," the I.G.C. said. "Poor financial returns for U.S. ethanol producers at the end of 2008 resulted in slower-than-expected expansion but, at 95 million tonnes, the use of maize for fuel ethanol in 2008-09 is still forecast to rise by some 24%. While blending margins have since improved, future expansion of the sector is expected to be slower than the very rapid rates of the last few years."
The Council pointed out that U.S. production capacity is expected to reach 58 billion liters per year "as new plants and expansions are completed." Current capacity was estimated at 48 billion liters, while actual output was 34 billion in 2008. Current capacity was sufficient to meet mandated levels through 2011, but further increases will be required to meet the mandate of 58 billion liters in 2015.
The I.G.C. forecast that 104 million tonnes of maize will be processed into ethanol in 2009-10, against 95 million in 2008-09 and 77 million in 2007-08.
In the case of the European Union, the Council said that while biofuels use was increasing, difficult economic conditions and large imports may continue to limit operations.
Ethanol production capacity in Canada was forecast to rise 2 billion liters from 1.1 billion, with the completion of plants under construction, which may increase grain use for fuels to 4 million tonnes, mainly maize, but also wheat.
China will use 4.7 million tonnes of grain to make fuel ethanol in 2008-09, which was the same as the prior year.
"Because of food security concerns, the Chinese government has indicated it will not approve any further plants that use food grains, total use is expected to remain stable in 2009-10," the I.G.C. indicated. "China’s most recently opened ethanol plant uses cassava as its feedstock."
The 123 million tonnes of grain the I.G.C. projects will be used in biofuels production in 2009-10 represented a climb of 11% over 111 million tonnes estimated to be used in 2008-09. That is less than half of the 26% increase posted in 2007-08 over the prior year. The grains usage for making biofuels in 2009-10 was more than three times the 37 million tonnes used in 2004-05.
Of the 123 million tonnes of grain projected to be used for making biofuels in the new season, the United States will account for 86%, or 106 million tonnes. That U.S. use, which is mainly maize, compares with 97.5 million tonnes in 2008-09 and 77.4 million in 2007-08.
The E.U. was projected to use 7.9 million tonnes of grain to make biofuels in 2009-10, of which 4.5 million will be wheat. China’s use was estimated at 4.7 million tonnes and Canada at 2.7 million.
This article can also be found in the digital edition of Milling and Baking News, June 30, 2009, starting on Page 1. Click