Uncertainty Ahead for the Biofuel Industry

Spring has finally sprung here in Yorkshire following a mild yet lengthy winter period. Winter crops are now beginning to emerge from dormancy and local farmers are keen to get back on the land with fertiliser applications and preparations for spring drilling.

Generally speaking, most winter crops are in a very good condition; disease pressures are low and most cereals are clean. Looking ahead to harvest, feed wheat for as available collection off the combine is currently valued in the region of £130.00/T ex-farm.

A slow start to the South American harvests and dry weather across the central US plains have persuaded the new crop market upwards over the last couple of weeks but with a backdrop of ongoing Brexit-based discussions, it is more difficult than ever to make sense of any price movements whether up or down. Furthermore, the value of the pound against other major currencies remains volatile and the slightest movement can often have a significant impact on UK ex-farm values.

For those of you with old crop wheat left in the shed, £150.00/T is still being offered for spot collection; short term demand is good and movement can be extremely quick if necessary.

Meanwhile, concerns regarding the longevity of the UK biofuel industry have gathered pace over the last couple of weeks as the UK government debates the future of crop-based fuel.

Currently, 4.75% of fuel at the petrol pumps must be renewable and by 2020, the government are hoping to raise this to 9.75%. However, they are also potentially planning to cap the amount of crop-based renewable fuel at 2% in order to encourage the use of waste, rather than food crops, within production. Alternatively, the government are also considering banning the use of crops within the biofuels sector completely.

If the crop cap takes effect, it would have a severe impact on the UK’s two big bio-ethanol plants (both of which are located in the North of England) and a consequently detrimental effect on the farmers which supply them.

A final decision regarding a biofuel crop cap is yet to be made by the government; this will certainly be something to watch over the coming months.

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