01 November 2011 15:45 [Source: ICIS news]
HOUSTON (ICIS)--The demand for biofuels should continue to grow in both North and South America in 2012 as government programmes support both biodiesel and ethanol, US agribusiness and biofuels maker Archer Daniels Midland (ADM) said on Tuesday.
"Biodiesel in South America will grow over the coming years as rail infrastructure is developed to move product," said ADM chief executive Patricia Woertz in a conference call with investors.
"An increase in the biodiesel mandates in Argentina and Brazil from 5% to 7 % will significantly improve demand in South America. In the US, we expect to see ethanol blending continue, despite political efforts to change the Renewable Fuel Standard [RFS]," Woertz said
"Ethanol does not need to trade at a discount to be economical for blenders right now. The blender credit could go away and blending would continue," Woertz added.
In the US, the Volumetric Ethanol Excise Tax Credit, also known as VEETC, provides gasoline blenders a credit of 45 cents for each gallon of ethanol blended with gasoline.
The RFS calls for 13.2bn gallons of ethanol to be blended with gasoline in 2012. The annual amount of ethanol will increase to 15bn gallons in 2015.
Earlier on Tuesday, ADM reported first-quarter 2012 net earnings of $460m (€331m), an increase of 33% from the same period a year earlier.
For the quarter ended on 30 September, ADM reported segment profits of $699m on total net sales and other income of $21.9bn.
ADM said this year's US corn crop is of good quality and is coming in drier than normal, which means the company will spend less on natural gas to dry the grain.
The company said the US soybean crop is also drier than normal with a slightly lower protein content that is easily managed in ADM processing systems.
"In the future, more of the world's demand for agricultural commodities will be met with non-US supply, and ADM will leverage its global asset base to help meet this demand," said Woertz.
($1 = €0.72)
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