Andersons, one of the U.S.' major players on the ethanol production scene, has started mixing cheaper soft red winter wheat into its corn-based biofuel. This move, according to Andersons, will drive down costs and lessen demand for corn. Andersons says the soft red winter wheat harvest is peaking, so the stuff is available in mass quantities. It's estimated that Andersons is currently mixing ten percent wheat in with corn.
Some industry analysts were initially surprised by the move, but most now see it as a savvy strategy for dealing with corn-related issues. Rich Feltes, an analyst at R.J. O'Brien in Chicago, told Reuters that, "With wheat cheaper than corn, they will likely continue to fit it into their mix to the extent their equipment will allow." And Chuck Woodside, chairman of the Renewable Fuels Association, says that:
It's been estimated that the ethanol industry uses 40 percent of the U.S.' corn, so adding an alternative crop into the mix seems logical to us.Corn is going to be tight. If you have the capacity to be able to say over the next year you were going to be able to use a blend, you might be able to justify that.
[Source: Reuters | Image: User:H20 – C.C. License 2.0]