* EU capacity to make bioethanol from wheat set to rise
* Brazilian shipments to the EU decline
* EU producers must prove environmental credentials
By Nigel Hunt
LONDON, Aug 28 (Reuters) - A sharp decline in wheat prices driven by a supply glut is set to lead to more of the grain being turned into motor fuel in the European Union.
Demand for bioethanol, a renewable substitute for petrol normally made from either grains or sugar crops, is increasing in the EU. It is seen as a way to reduce emissions of the greenhouse gases believed to contribute to climate change.
Wheat is now in pole position to help meet the demand with the price of alternative feedstock sugar rising to the highest levels in nearly three decades earlier this month [ID:nLC585640] and sugar-derived bioethanol imports from Brazil on the wane.
"Those plants that are flexible in the processing could switch to wheat and get a very cheap feedstock," said Rob Vierhout, secretary general of the European Bioethanol Fuel Association (eBio) in Brussels.
Wheat futures BL2c1 have fallen sharply to contract lows in Paris during the last few weeks, depressed by larger-than-expected harvests in both France and Germany.
To read full analysis please go to http://www.reuters.com/article/latestCrisis/idUSLS715067