Biofuels hopes hit by high feedstock values and cheap US/Brazil imports

Arable farmers looking to the biofuels industry to bolster wheat and rapeseed prices could be in for a disappointment. While European biofuel plants cannot operate at current high feedstock values, the market in Europe is being undercut by shiploads of cheap biodiesel and bioethanol from the US and Brazil.
The Renewable Transport Fuel Obligation comes into force from April 2008, but much of the UK’s fledgling biofuels industry is struggling to get started against a background of high domestic feedstock prices, a drying up of investment funds and a flood of subsidised cut price biofuel from abroad.

Today’s revised budgets just do not add up to profitable business proposition, with the consequence that some projects will never get off the ground while others are being put on hold.

One small piece of good news is that the rise in the price of crude oil towards $100/barrel has eased the cost differential between the mineral and biofuel feedstocks, and the biofuel investors with deep pockets are taking the long view that grain shortages will recover in a year or two and feedstock prices will fall as a result.

The continuing bad news is that the credit squeeze and downturn in the economy has reduced the availability and increased the cost of investment funds for start-up projects not backed by the multi-national big players.

Farmers Guardian