Higher wheat demand from the UK ethanol industry will lead to record domestic wheat consumption of 15.69 million mt in the 2016/17 season, a rise of 6% year on year, estimates by the UK Department for Environment, Food & Rural Affairs showed Wednesday.
The figure was 12,000 mt higher than Defra forecast in March for the July 2016 to June 2017 reporting season.
As a result, the UK was expected to have become a net importer of wheat for only the fourth time in at least 25 years, as Defra raised its estimate for UK wheat imports this season to 1.70 million mt, 100,000 mt higher than the March estimate.
"Compared with the March forecast, demand from the bioethanol industry has been revised up. This has more than offset a slight decline in usage by flour millers," the Agriculture and Horticulture Development Board said.
The main ethanol producers in the UK are CropEnergies' Ensus and Associated British Foods' Vivergo with annual production capacities of 400,000 cu m and 420,000 cu m, respectively.
CropEnergies recently announced an increase in its revenue forecast, which it mainly attributed to the high utilization of its production facilities and, most of all, UK plant which had been temporarily shut in the previous year.
Attractive ethanol prices and margins would have also provided an incentive for producers to run their plants and, despite an extended maintenance period by Vivergo in January and February and market talk regarding Ensus run rates, both producers may have provided a better-than-expected source of demand for UK wheat.
