Global industrial use of grains in slower growth

by Morton Sosland
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LONDON — A marked slowing of growth in global industrial use of grains is in prospect for 2011-12, according to the International Grains Council. The Council estimated world industrial use in the crop year that has just begun as 2% above the prior crop year, in contrast with the gain of 6% in the prior year and 13% in 2009-10 over 2008-09.

The further deceleration from the rapid pace of prior years “mainly reflects slowing expansion in the ethanol sector, especially in the United States,” the Council indicated.

The I.G.C. forecast industrial use of all grains in 2011-12 at 303.4 million tonnes, compared with 297.3 million in the previous year and 279.8 million in 2009-10. Industrial use at the indicated level would represent 17% of expected 1,820.9 million tonnes of all grain to be used in 2011-12. Besides industrial use, expected disappearance includes 628.8 million tonnes for food and 763.9 million for feed.

Use of grains to make biofuels, which has been the primary force accounting for industrial use expansion, was forecast to rise 1.3% in 2011-12, to 149.7 million tonnes, against 134.3 million in 2009-10 and 110.4 million in 2008-09. Global use of grains for making ethanol in 2011-12 was projected at 163.6 million tonnes.

“Having grown by an annual average of 24% in the past five years, use for biofuels was forecast to rise by only 2% in 2011-12,” the I.G.C. said. “In order to meet government-mandated levels of ethanol use, the industry in the U.S. expanded rapidly during the past decade, but, with annual targets already exceeded, expansion is slowing. The industry is still on course to surpass the 2011 ethanol blending requirement of 12.6 billion gallons, but high maize prices have negatively affected biofuels production levels recently and the expiration of ethanol tax credits and import tariffs at the end of the year, if not renewed, may impact some less efficient plants in 2012.”

Of the 149.7 million tonnes of grain that are projected to be used in 2011-12 to make biofuels, the United States will account for 129 million, or 86%. The U.S. usage would be essentially unchanged from 128.8 million tonnes in 2010-11. The latter was up 11% from 117.6 million in 2009-10, and the latter was an increase of 23% from 96.1 million in 2008-09.

The European Union was a distant second in processing grains into biofuels. It was forecast to use 10.1 million tonnes in 2011-12, compared with 8.3 million in the prior year and 7.4 million in 2009-10.

The I.G.C. pointed out that few of the E.U. member states achieved the targeted 5.75% share of renewable fuel (ethanol and biodiesel) in the transport sector in 2010. The Council said the alternative fuel industry is being affected by rising input costs and competition from lower-priced imports with some plants running at reduced capacity or idled.

“Nevertheless, expansion is expected to accelerate in the years ahead in order to meet the legally binding target of a 10% share of transport fuels by 2020,” the I.G.C. said.

In Canada, where the government requires 5% bioethanol content in gasoline, that relates to 2 billion liters. That is in line with Canada’s existing capacity to make ethanol. Further, a 2% renewable content in diesel and heating is due to be implemented. Canada’s use of grains for biofuels in 2011-12 was forecast at 2.7 million tonnes, against 2.6 million in the previous crop year.

China’s use of grains to make ethanol in the new season was projected at 6.1 million tonnes, compared with 5.7 million in 2010-11 and 5.5 million in 2009-10. According to the I.G.C., the government of China continued to limit grain-based ethanol production to five plants processing wheat and maize. China intends that future growth in renewable fuels production be based on non-food feedstock, including cassava. At present, 10 provinces have a 10% ethanol mandate, and due to limited production, that is not likely to be extended to other parts of the country, the Council stated.

Of the 149.7 million tonnes of grains that are forecast to be processed into biofuels in 2011-12, the I.G.C. estimated that maize, or corn, will account for 138.2 million, or 92%. The U.S. alone will account for 127 million tonnes of the maize used to make ethanol. Global use of maize projected for 2011-12 was about the same as 137.6 million in 2010-11.

Global use of wheat to make ethanol was estimated at 7.4 million tonnes, against 6 million in the prior season; sorghum, 2.4 million, unchanged; barley, 1 million, against 600,000, and other crops, 700,000, against 600,000 in 2010-11. The E.U., at 5.4 million, Canada at 2.1 million and China at 1 million, account for wheat use in fuel production.

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