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3 poignant Reuters stories

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    1. http://www.planetark.com/dailynewsstory.cfm/newsid/42908/story.htm Biofuels May Wipe Out UK Wheat Exports ... Mail this story to a friend | Printer
    Message 1 of 1 , Jul 1 11:57 PM
      1. http://www.planetark.com/dailynewsstory.cfm/newsid/42908/story.htm

      Biofuels May Wipe Out UK Wheat Exports

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      UK: July 2, 2007

      LONDON - Surging demand for British grain around 2010 as major bioethanol
      plants come on line will wipe out the UK's wheat exports unless there is a
      big jump in output by domestic farmers.

      "They (bioethanol plants) are positioned so they can take imports, which is
      sensible. We are not far from wiping out the exportable surplus," said Mark
      Isaacson, chief executive of farmer cooperative Fengrain.

      Britain's wheat outlook has been transformed this week by news that UK oil
      major BP Plc, Associated British Foods Plc and US chemical company DuPont
      plan to build a bioethanol plant in Hull, northeast England.

      "The ABF/BP/DuPont project in Hull will change the dynamics of the UK wheat
      market," said Malcolm Shepherd of consultants BioFuel Matters Ltd.

      The plant is expected to consume about one million tonnes of wheat a year
      and follows the announcement of a similar plant from Ensus in Teesside, also
      in northeast England, financed by two US private equity funds. Both plants
      should come on line sometime during 2009 and make their impact on Britain's
      wheat market in 2010. Demand for biofuels is expected to climb in 2010,
      driven by UK government rules that five percent of motor fuel must come from
      renewable sources by that year. Britain has an exportable wheat surplus of
      about 2.5 million tonnes but that total is expected to fall by about 750,000
      tonnes later this year when a Cargill sweetener plant in Manchester, which
      uses wheat as its feedstock, comes on line. Spanish energy and engineering
      group Abengoa has announced plans to build a plant in Immingham, northeast
      England, that would consume about one million tonnes of wheat while several
      smaller projects have also been proposed.

      "We never thought there was room for more than two, maybe three plants,"
      Isaacson said.


      Some projects have been developed by new biofuels start-up companies but
      industry sources said the emergence of major companies such as BP and
      Abengoa in the sector could put their future in jeopardy. Industry sources
      said there could be a significant production response in Britain. "Farmers
      in the long term have always done well in coping with demand shocks. They
      have always adapted. There is a window for people to get ready for what is
      going to happen," said Home-Grown Cereals Authority economist Michael

      "There is potential to increase area if that is what farmers choose to do,"
      he said, adding planting decisions would be dictated by price movements on
      world markets.

      Shepherd said farmers would also strive for increased yields with the
      assistance of agronomists and seed suppliers.

      "Farmers can readily supply the early plants from the current exportable
      surplus and within a couple of years we will see a major increase in UK
      wheat production as farmers shift towards growing the high starch wheat
      varieties that produce higher yields per hectare," Shepherd said.

      Isaacson said the spirit yield of grain has so far been mainly a concern for
      distillers but breeders would begin to focus more intensely on maximising
      litres of alcohol per tonne for wheat.

      If Britain did need imports, he noted, the most likely sources would be the
      Black Sea region, but world wheat prices would probably be high.

      "The game has changed. No one is looking to dump cheap wheat," he said.

      Story by Nigel Hunt


      2. http://www.planetark.com/dailynewsstory.cfm/newsid/42907/story.htm

      Huge Sowings Ease Ethanol Crunch on US Corn

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      US: July 2, 2007

      WASHINGTON - US farmers are on track to grow their biggest corn crop ever,
      an astonishing 12.8 billion bushels, a government report said on Friday,
      enough for livestock feeders and the booming fuel ethanol industry.

      "There will be enough corn," Agriculture Secretary Mike Johanns said. "It
      looks to me ... some of the pressure went off."

      Ethanol production is forecast to double by the end of 2008 to more than 13
      billion gallons. Demand for corn will continue to grow in the near term
      despite mammoth crops. A bushel of corn, the major feedstock for ethanol,
      yields 2.8 gallons of the renewable fuel.

      Based on a survey of 88,000 growers in the first half of June, the
      Agriculture Department said farmers planted 92.9 million acres of corn this
      spring, the largest sowing since 1944 and 3 percent more than growers
      planned in March.

      With normal weather and yields, the crop would top 12.8 billion bushels, 1
      billion bushels larger than the record set in 2004. Some analysts, including
      David Driscoll of Citigroup, said more than 13 billion bushels may be

      "It's just incredible," said USDA chief economist Keith Collins of the
      possible huge crop and the prospect of a larger corn stockpile. It meant "a
      little cushion" against bad weather, he said, and will "give livestock
      feeders some relief."

      The corn stockpile could be roughly 500 million bushels larger than expected
      a month ago because of the upturn in corn plantings and a quarterly USDA
      report showing more corn was in warehouses than expected.

      Some 3.4 billion bushels of this year's crop are forecast to be used for
      ethanol during the 2007/08 marketing year, up sharply from the 2.15 billion
      bushels being used from the 2006 crop.

      Because of the sudden surge in demand for corn, USDA says the average
      farm-gate price for corn will run at record levels.

      The high prices have resulted in less corn being fed to livestock over the
      past couple of years.

      "Many farmers across the country shifted to planting more corn this year at
      the expense of soybeans," said USDA.

      In Illinois and Iowa, the two leading corn and soybean states, growers cut
      soybean plantings by a total of 2.1 million acres from 2006.

      Soybean plantings were pegged at 64.1 million acres, down 15 percent from
      the record set last year. Based on USDA's projected yields and estimates of
      harvest area, the soybean harvest would be 2.62 billion bushels, the
      smallest since 2003.

      Wheat sowings were up 6.0 percent from last year at 60.5 million acres. The
      wheat harvest would reach 2.178 billion bushels based on harvested acreage
      of 52.484 million acres.

      Cotton plantings were estimated at an 18-year low of 11.1 million acres.
      Based on an average abandonment over the last five years of 1.24 million
      acres, the cotton crop would hit 16.84 million bales weighing 480 lbs (218
      kg) based on USDA's projected yield of 820 lbs per acre.

      Story by Charles Abbott


      3. http://www.planetark.com/dailynewsstory.cfm/newsid/42906/story.htm

      Bolivia, Brazil Leaders Clash on Biofuels Issue

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      PARAGUAY: July 2, 2007

      ASUNCION, Paraguay - Bolivia's president blasted ethanol production on
      Friday, saying it was "sinister to convert food into fuel" in a speech that
      disputed an earlier address by Brazil's leader, who said biofuels production
      can boost the regional economy.

      "The use of corn to produce biofuels has pushed prices up. More land is used
      to grow corn instead of other food crops like soy," Bolivian President Evo
      Morales said at a Mercosur trade bloc summit in the Paraguayan capital

      His speech, attended by the presidents of Argentina, Brazil, Chile, Ecuador,
      Uruguay and Paraguay, came shortly after Brazilian President Luiz Inacio
      Lula da Silva said ethanol production should be seen as a motor of economic
      growth for the region.

      Morales said he agreed with criticism of biofuels made by fellow leftist
      Latim American leaders, Fidel Castro of Cuba and Hugo Chavez of Venezuela.

      Castro wrote a newspaper article in April calling the ethanol industry
      "genocidal" -- a stance disputed by biofuels powerhouse Brazil.

      Soon thereafter, Chavez denounced a US initiative to promote ethanol
      production in developing countries, saying it was a sure-fire way to worsen
      hunger by lifting food prices.

      "When (Fidel Castro) got out of bed to write an article to criticize the
      sickening enthusiasm of (US President) George Bush for ethanol, he was
      right," Morales said.

      Castro has been recovering from a string of operations for an intestinal
      illness that prompted the Cuban leader to hand over power temporarily to his
      younger brother Raul last July.

      Lula, the center-left leader of South America's largest economy, has said he
      is "obsessed" with ethanol and has defended biofuel production as a way to
      create jobs in poor rural communities.

      Brazil is the world's leading producer of sugar cane-based ethanol and a
      pioneer in the use of biofuels.

      Story by Daniela Desantis


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