* ADM sees blend rising to 12 pct or more
* EPA considering allowing a 15 pct blend
By Karl Plume
CHICAGO, Aug 4 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.
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
Both plants will have the capacity to produce 275 million
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)