(Adds details, quotes)
By Michael Hirtzer
CHICAGO, March 6 Leading U.S. ethanol maker POET
Biorefining, in a rare move, is bidding for soft red winter
wheat (SRW) at an Indiana facility as supplies of corn, the main
feedstock in ethanol production, shrink to the smallest in 17
Privately held POET, the country's No. 2 ethanol maker
behind Archer Daniels Midland Co, said on its website
that it was bidding to buy soft red winter wheat (SRW). The
wheat is typically milled into flour for crackers and biscuits
but can produce enough starch to offer at least limited
substitution for corn as a feedstock for ethanol, industry
"Most POET plants have the ability to process additional
feedstocks such as wheat or sorghum along with corn, and they
will do so if it makes sense in the local markets. Being able to
use multiple feedstocks can help manage costs and balance those
markets," James Moe, president of POET's design and construction
and plant management, said in an email to Reuters.
Corn is the main feedstock in ethanol production, but U.S.
supplies at the end of this summer are forecast to be the
smallest in 17 years after drought diminished last summer's
harvest and drove prices to record highs. SRW wheat, a variety
grown primarily in the eastern U.S. Midwest, in contrast, is
both easier to get and cheaper than corn now.
At POET's facility in Portland, in central Indiana near the
border of Ohio, its grain buyers were bidding $7.44 per bushel
for corn and $6.85 for wheat, according to POET's website.
The Portland plant typically consumes 24 million bushels of
corn to produce 68 million gallons of ethanol per year,
according to the company.
POET appears to be the only major ethanol producer using
wheat now, as other producers have said it is not yet a good
option for them.
Analysts and industry experts said using wheat is usually
only a temporary solution for ethanol plants designed for corn.
Most facilities produce a byproduct called distiller's grains
that is sold as animal feed as well as other byproducts that
include corn oil. Using wheat as the feedstock alters the
Ethanol industry experts said producers could typically
blend 10 to 20 percent of wheat with corn as the feedstock mix
for production without requiring significant equipment
alterations and changes in yeast and enzymes.
Availability and pricing and quality of corn drive whether
or not bringing wheat into the mix is cost effective.
Industry players said plants located in areas where the corn
crop was hard hit by a toxic mold condition known as aflatoxin
have more incentive to look to wheat because bringing corn in
from outlying areas where aflatoxin is not a problem adds to
Still, many ethanol makers, including the top U.S. ethanol
producer ADM said they have no plans to use wheat to make
Valero Renewable Fuels Co., a unit of Valero Energy
, said they are not looking to use wheat at all right now
as they focus on boosting revenues from corn-based byproducts,
particularly corn oil.
Neill McKinstray, president of the ethanol group of The
Andersons, which operates four plants with 350 million gallons
of capacity said: "It doesn't work for us today."
(Additional reporting by Mark Weinraub, Sam Nelson and Karl
Plume in Chicago, Carey Gillam in Kansas City.; Editing by
Gerald E. McCormick and Bob Burgdorfer)