Biofuel Will Save The Wheat Market Won't It?
Figures from the IGC estimate that in 2009/10 global usage of grains for industrial purposes (excluding food, feed and seed) will reach a record 257 MMT. That sounds pretty bullish doesn't it? It represents 15% of disappearance of the global grain crop of 1.7 billion tonnes this year.
But whilst that 257 MMT represents an increase in usage of 8% from the 239 MMT consumed in 2008/09, it is interesting to note that the rate of expansion in this sector is actually slowing quite significantly.
Growth in the previous season, 2007/08, was 10% and the year before, 2006/07 we had seen an increase of 16% more grain consumed for industrial use.
Of the 257 MMT going into the industrial sector, just over half of it, 135.7 MMT, will be destined for ethanol production for both fuel and non-fuel purposes. The bulk of the remainder will go for either starch manufacture (85.6 MMT), or brewing (33.4 MMT):
Grains used for biofuels in 2009-10 are forecast to total 124.9 MMT, again whilst that is an increase of 15% on 2008/09, the rate of growth is also not rising as fast as in previous years. In 2008/09 growth in the biofuel sector was 24% and the previous year it was 36%.
If we analyse this biofuel sector, then we find that the vast majority of the grain consumed here is corn, accounting for 93%, or 116.1 MMT of global usage. Wheat comes a very distant second at just 5.5 MMT, with sorghum third at 2.3 MMT:
Based on these figures the notion that increased usage of wheat from the biofuel sector will be the salvation of the wheat market looks somewhat optimistic to say the least. At least in the near-term, where that 5.5 MMT represents less than 1% of the global 676 MMT wheat crop in 2009/10. I've done a chart for that as well:
But whilst that 257 MMT represents an increase in usage of 8% from the 239 MMT consumed in 2008/09, it is interesting to note that the rate of expansion in this sector is actually slowing quite significantly.
Growth in the previous season, 2007/08, was 10% and the year before, 2006/07 we had seen an increase of 16% more grain consumed for industrial use.
Of the 257 MMT going into the industrial sector, just over half of it, 135.7 MMT, will be destined for ethanol production for both fuel and non-fuel purposes. The bulk of the remainder will go for either starch manufacture (85.6 MMT), or brewing (33.4 MMT):
Grains used for biofuels in 2009-10 are forecast to total 124.9 MMT, again whilst that is an increase of 15% on 2008/09, the rate of growth is also not rising as fast as in previous years. In 2008/09 growth in the biofuel sector was 24% and the previous year it was 36%.
If we analyse this biofuel sector, then we find that the vast majority of the grain consumed here is corn, accounting for 93%, or 116.1 MMT of global usage. Wheat comes a very distant second at just 5.5 MMT, with sorghum third at 2.3 MMT:
Based on these figures the notion that increased usage of wheat from the biofuel sector will be the salvation of the wheat market looks somewhat optimistic to say the least. At least in the near-term, where that 5.5 MMT represents less than 1% of the global 676 MMT wheat crop in 2009/10. I've done a chart for that as well:
