by Agrimoney.com
Europe's biggest wheat ethanol plant has confirmed Agrimoney.com's report that it is to mothball its operations, in a move viewed as depressing London wheat prices on a positive day for prices on other markets.
Ensus said on Friday that it would "temporarily" close its UK plant, designed to turn 1.2m tonnes of wheat a year into ethanol, to "ensure the long-term health of the business for both our customers and our employees".
The company blamed the shutdown on "depressed market conditions" caused by double whammy of slower-than-expected uptake of bioethanol, reflecting delays in the implementation of European Union consumption targets, and strong competition from exported US supplies of the biofuel.
"At the moment the margins are just not sufficient for us to continue running," Peter Sopp, the Ensus chief executive, said.
"We are confident in the future of the business in another two-to-four months, but we have to come off for a short period."
Price impact
On London's futures market, the shutdown of a plant which - with the Vivergo site being developed by Associated British Foods, BP and DuPont - had sufficient capacity to swallow up the UK's exportable wheat surplus, depressed prices of wheat for near-term delivery.
The July lot closed down 1.1% at £187.00 a tonne, the lowest for the contract for nearly two months.
However, contracts for delivery further ahead improved, in line with a rebound in wheat prices on global markets.
London's November contract gained 1.6% to £175.25 a tonne.
The Ensus shutdown "has definitely had an effect", a UK grain trader told Agrimoney.com, questioning whether some investors might have acted before news of the closure became widely available.
Another said: "The July contract has been banjaxed. In one swoop, an extra 200,000 tonnes of wheat which now won't be used has been landed on the market."
Over the last week, the July contract has fallen by 4%, while the November lot has gained more than 2%. The discount of the November lot to the July contract has more than halved.
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