BERLIN - Germany's biodiesel industry sees rising demand in 2010 from oil companies for blending with fossil fuels, the head of Germany's bioethanol industry association said on Friday.

The German government's plan to raise maximum permitted bioethanol levels in gasoline could boost sales while other European countries were also raising blending levels, said BDBE chief executive Dietrich Klein.

We are optimistic after a difficult period, Klein said at the Green Week trade fair. Germany's new government planned to raise maximum permitted bioethanol levels in gasoline from five percent to ten percent, called E10 blends, to cut pollution.

The new regulation could take force by summer 2010, with major volumes of E10 fuel enter the market by next winter.

Meanwhile, heavy competition from Brazilian bioethanol was substantially reduced in 2009 and was likely to remain at low levels in early 2010, said Lutz Guderjahn, executive board member of German bioethanol producer Cropenergies, a unit of German sugar producer Suedzucker.

Brazilian bioethanol sales to Europe had fallen by about half in 2009. With global sugar prices so high, Brazil is finding it more attractive to export sugar rather than processing it into bioethanol, Guderjahn said.

I expect this trend to continue in 2010 although much will depend on the outcome of the Brazilian and Indian sugar crops this year, said Guderjahn.


Low prices made grains, especially maize and barley, the most attractive current feedstock for bioethanol production, said Guderjahn.

This was also because comparatively high soybean markets meant bioethanol producers were achieving high prices for animal feed meal by-products, he said.

Large EU sugar crops this winter were also likely to mean large supplies of cheap sugar for bioethanol feedstock, said Suedzucker board member and BDBE vice chairman Markwart Kunz.

Farmers in countries including Germany were expected to produce well over their European Union production quotas in this winter's crop. Such sugar produced above EU quotas cannot be sold as food and must be marketed for other industrial uses including bioethanol.

We will see a large volume of non-quota sugar available for bioethanol output this year, said Kunz.

Despite current high sugar prices, such non-quota sugar would still be attractive as bioethanol feedstock, he said. Non-quota sugar was about 40 percent cheaper than quota sugar eligible for sale as food.

(Editing by Keiron Henderson)