Canada’s Husky Energy abandons wheat feedstock as prices soar

In Canada, Husky Energy will abandon wheat as an ethanol feedstock, and is offering $6 per bushel for spring corn deliveries, following the run-up in wheat prices. The rapid increase in wheat prices has prompted farmers to withhold wheat from the market in the hope of achieving higher prices at a later date. Husky said its Minnedosa plant in Manitoba has already switched to a 75 percent corn blend with 25 percent wheat.

At the Chicago Board of Trade, wheat reached an all-time high of $12 per bushel earlier this month, surging more than 25 percent after Kazakhstan announced it would impose export tariffs to reduce exports after consumer prices for wheat rose more than 20 percent in 2007. Wheat reserves are expected to fall to 109 million bushels, the lowest figures since the 1970s. Spring wheat rose to more than $24 per bushel.

A professor at the University of Idaho recently testified before the state Agriculture Affairs committees in the state House and Senate that corn ethanol production is causing economic “dislocation”. Professor Garth Taylor also identified Brazilian, Argentine and Australian droughts as well as increased Third World demand for the run-up in prices. He also said that the weak dollar, US drought risk, low interest rates and the unsigned Farm Bill have impacted prices.

Providing more background to the reserve stock shortages, the International Food Policy Research Institute recently released a report saying that the world is eating more food than it produces, and that biofuel production runs the risk of creating social unrest. The report projected a 66 percent increase in the price of corn and a 50 percent increase in oilseed prices by 2020, attributed to biofuel production. The report also said that global cereal stocks have fallen to their lowest levels in more than 15 years.

The International Grains Council said that it projected an increase in global wheat stocks in 2008-09 due to increased planting. Poor harvests in Australia, Ukraine and Canada resulted in significant shortfalls in production in the past year.

Free Subscription to the Daily Biofuels Digest e-newsletter

Related Stories

Husky Energy switches to corn from wheat at Manitoba plant, citing feedstock cost

Husky Energy said that rising wheat prices had forced the company to switch feedstock at its Minnedosa plant in western Manitoba to corn. The company said that corn now accounted for up up to 75 perce...

Husky Energy opens 35 Mgy wheat, corn ethanol plant in Manitoba

In Canada, Husky Energy opened its 34 Mgy wheat and corn ethanol plant in Minnedosa, Manitoba. The plant replaces an older 4 Mgy facility, and will also produce 126,000 tonnes of dried distillers grai...

US grain stock soar and prices fall on increased production, flagging ethanol demand, weak exports

AgWeb is reporting that January USDA reports on grain stocks have forced down corn, wheat and soybean prices. The USDA reported that corn stocks were 300 million bushels above the market consensus, an...

Wheat prices hit new highs in Europe as impact of drought is felt

In Europe, the price of wheat rose to a record $370.55 per metric ton, putting pressure on European ethanol profitability. Wheat-producing areas of Europe experienced drought in the spring and heavy r...

USDA’s chief economist blasts linkage of wheat prices, ethanol demand

The USDA's chief economist blasted the Washington Post at the National Farmers Union meeting over an article connecting high wheat prices to ethanol demand. He said the spike in wheat prices had nothi...

Indian biodiesel trial halted after feedstock prices soar

In India, the managing director of PMTCL in Pune said that a biodiesel trial would be discontinued due to high producer prices for biodiesel feedstock. The 100-bus trial of B20 was canceled after t...