Cargill shelves plans for Kansas ethanol plant

CHICAGO, Feb 26 (Reuters) - U.S. agribusiness giant Cargill Inc [CARG.UL] suspended plans to build a $200 million, 100-million-gallon-a-year ethanol distillery near Topeka, Kansas, due to tough market conditions amid record-high corn prices, a company spokesman said Tuesday.

"With the price of corn going in and the price of ethanol coming out, it's a difficult market and we didn't feel we could go forward right now," spokesman Bill Brady said.

Construction had not yet started as the plant was only in the permitting stage.

Corn prices have more than doubled over the past two years and hit a record-high above $5 a bushel this week, putting the squeeze on profits for ethanol plants that rely on corn as their main feedstock.

Near record crude oil prices have helped lift ethanol prices recently, but those gains have been far outpaced by the soaring corn market.

Ethanol plant margins improved from near break-even in recent months, but averaged only 25 to 30 cents a gallon last week after conversion costs for making the biofuel, including costs for natural gas that fuels most plants.

U.S. ethanol production capacity has more than doubled in the past year to nearly 8.2 billion gallons annually, according to trade sources and the Renewable Fuels Association.

High costs and thin margins have already delayed or halted construction on at least five U.S. ethanol plants in recent months and industry analysts expect more of the same as grain and fuel costs hang near historically high levels. (Reporting by Karl Plume; Editing by Christian Wiessner)