ADM says US ethanol blend likely to rise in 2010
* ADM sees blend rising to 12 pct or more
* EPA considering allowing a 15 pct blend
By Karl Plume
CHICAGO, Aug 4 (Reuters) - U.S. agricultural processor and ethanol producer Archer Daniels Midland Co (ADM.N) said on Tuesday that it expected the percentage of ethanol allowed in the U.S. fuel supply to increase in 2010.
Current guidelines allow fuel mixers to blend gasoline with up to 10 percent ethanol, but ADM said that could rise to 12 percent or more next year.
Ethanol proponents have called for an increase to a 15 percent blend, or E15. The U.S. Environmental Protection Agency was expected to decide whether to change the blend guidelines by December. [ID:nN16367099]
"Even if (the EPA) does not respond to go all the way to 15 (percent), it is our expectation, or hope, that E12 on the way to E15 is one of the likely outcomes," ADM Chief Executive Officer Patricia Woertz said on Tuesday.
"All of the data we've seen says that it can be safely and effectively done without adding additional infrastructure costs," she said during a conference call with analysts.
Opponents worry higher ethanol blends could damage car engines, especially in older vehicles, and drive up food prices. [ID:nN09390011] [ID:nN18377675]
Increased demand for ethanol could help ADM profits, which fell 83 percent in the fiscal fourth quarter to $64 million as the recession curbed demand for both food and fuel. ADM reported an $11 million loss in its corn processing segment, which includes the company's ethanol production. [ID:nN04537249]
ADM is the second largest producer of corn-based ethanol in the United States but will be the largest once two new plants currently under construction come on line.
An ADM plant in Columbus, Nebraska, will begin operating in the fourth quarter of this year and its plant in Cedar Rapids, Iowa, will come on line in the third quarter of 2010, Woertz said.
Both plants will have the capacity to produce 275 million gallons annually.
U.S. ethanol production currently stands at 10.5 billion to 11 billion gallons annually, with 2 billion to 2.5 billion gallons in capacity currently idled and 1.5 billion to 2 billion under construction, said ADM Chief Financial Officer Steve Mills, citing industry sources.
The ethanol industry was hit hard by a plunge in ethanol prices from their 2008 highs while corn prices remained high by historical standards, forcing plants to idle capacity and tipping some producers into bankruptcy.
But margins have improved in recent weeks as corn prices slipped last month to the lowest level of 2009.
Meanwhile, near-ideal crop weather through much of the U.S. Corn Belt this summer was expected to yield one of the largest corn crops on record, which could hold down corn prices. (Reporting by Karl Plume; Editing by Lisa Shumaker)
- IPhone emerges from 'bygone era', reviewers hail bigger handset
- Fed renews zero rate pledge, but hints at steeper rate hike path
- On eve of secession vote, UK's fate hangs on a divided Scotland |
- Boeing, SpaceX win contracts to build 'space taxis' for NASA
- Islamic State campaign tests Obama's commitment to Mideast allies