The potential closure of the UK's two largest bioethanol producers, following a UK-US trade deal that effectively removes tariffs on imports of US ethanol, is set to weigh on UK wheat prices, according to market participants.
Both of the UK's major ethanol producers process wheat, offering a major outlet for the country's farmers.
But Associated British Foods (ABF) Sugar today said its subsidiary, Vivergo Fuels, is preparing to "wind down" operations and will cease production by 13 September unless government intervention is provided. Vivergo stopped purchasing wheat on 11 June.
Vivergo's Saltend plant, with a nameplate capacity of 416mn l/yr, is able to process 1mn t of feed wheat when running at full capacity, according to a spokesperson for Vivergo Fuels. The feedstock is typically of UK origin.
"For the majority of our time in operation, we have used 100pc UK wheat. In 2024, we used a small proportion of imported wheat due to limited availability of domestic product via grain suppliers. All wheat used in 2025 has been UK wheat," the spokesperson said.
The UK is set to produce 12.8mn t of wheat in the 2025-26 season (July-June), in line with average output across the previous five years. A potential shutdown of UK wheat-derived ethanol plants, including CropEnergies' Ensus plant with nameplate capacity of 397mn l, could see UK wheat lose a significant share of its domestic demand. Ethanol production could consume up to 15pc of UK wheat supply if both plants run at full capacity, assuming a similar level of processing across both plants, Argus calculations show.
This hit to UK wheat demand could weigh heavily on UK feed wheat prices. Wheat producers are unlikely to find new demand in the international market. The UK exports an average of 641,000t, just 4.5pc, of its crop per marketing year, latest available customs data show.
Lower prices could spur some additional demand from the feed sector, trading firms said, and help wheat price in against competing feed crops such as corn. ICE-listed UK feed wheat futures have shed value so far this week.
The UK government is in communication with both Vivergo and Ensus, the two companies said. "The government has now committed to formal negotiations to reach a sustainable solution," according to ABF Sugar.
ABF Sugar's chief executive, Paul Kenward, previously suggested raising the UK's ethanol blending mandate to E15 from E10 — a move that would increase UK ethanol demand by 660mn l/yr, according to Vivergo Fuels estimates. If realised, this could offer a boost to feedstock demand.
