Feed wheat priced out of ethanol market

(Resource News International) — Ethanol plants in western Canada have decided to step back from the feed wheat market and are looking instead to alternative feed stocks, according to industry officials.

Dennis Floate, senior communications advisor for Husky Energy, said the company has decided to back away from feed wheat use in its ethanol plants for the time being.

“One of our grain buyers advised me that at this point in time, there is very little product coming onto the market that is feed stock. A lot of producers seem to be holding off until prices get even higher and Husky has decided not to participate in the market.”

Floate said Husky’s ethanol plant at Minnedosa, Man., is turning to corn as an alternative feed stock ingredient. He noted the bulk of the corn is sourced locally, in line with Husky’s original plan to use locally sourced feed wheat.

Raymond Dyck, grain marketing co-ordinator for Husky Energy, said the company is offering $6 per bushel for corn for April, May or June delivery to the Minnedosa plant. That compares to the $7.25 per bushel offered for wheat delivered to the plant.

Dyck said the Minnedosa plant, about 50 km north of Brandon, is currently producing an ethanol blend of 75 per cent corn and 25 per cent wheat and he anticipates the situation continuing like that for some time.

“With grain prices shaping up like they are for the fall already as well as for new-crop material, it looks like we will be continuing like this into the coming fall and winter.”

When asked about Husky’s ethanol plant at Lloydminster, Sask., Floate said, “We’re starting to phase in more and more corn there as well.”

Husky’s plants at Lloydminster and Minnedosa are the two largest ethanol plants operating in Western Canada, each having a yearly production capacity of 130 million litres.

The new Minnedosa plant was constructed on the site of Husky’s original ethanol plant there, which was built in 1981.

Although Husky’s ethanol plants were intended to be wheat-based, Dyck said it is easy to switch from feed wheat use to corn use.