Market conditions for European wheat-ethanol producers, many of which have closed plans, remain "very challenging" despite anti-dumping measures against imports from the US, Lantmannen said.

The Swedish-based agricultural co-operative, owned by more than 33,000 farmers, said that while its own ethanol operations had reduced losses to SEK22m in the January-to-April period, this was largely down to efficiency improvements at its main ethanol plant.

"The market situation is very challenging," said the group, one of the ethanol producers which in Europe use wheat as their main feedstock, rather than corn as in the US.

"Market conditions have deteriorated in the first four months of the year," despite a European Commission move in February to impose an anti-dumping duty of E62.30 (\\$81.80) per tonne on imports of US bioethanol intended for use as fuel.

The tariff - which US ethanol producers have complained violates EU law, and have pledged to fight with "every challenge available to us" – followed the closure last year of a loophole which allowed ethanol/gasoline blends to be imported as chemicals, with lower duty rates.

'Squeezing profitability'

However, the levy "did not strengthen the price of ethanol to the extent expected, which has resulted in production standstills at plants in Europe", said Lantmannen, which in April shut its smaller plant, responsible for 25% of its production.

"Grain prices are still at a level which, in combination with excess ethanol production, is squeezing profitability in the business," with a 10% drop in EU fuel consumption, year on year, adding to market pressure.

"Several ethanol producers are failing to achieve profitability, and even larger competitors in the UK and the Netherlands have taken the decision to reduce or completely shut down their production."

Mothballed sites include the Ensus site in northern England, the European Union's biggest ethanol plant, which has surprised many observers by remaining closed despite a pullback of some 10% in UK wheat prices since it shut two months ago.

The output at the new Vivergo site nearby, with capacity of similar size, remains at low levels amid rumours of teething troubles.

"There is some manufacturing going on but it's a slow affair, and I wonder if they'll use much more than 100,000 tonnes of wheat this season," biofuels consultant Richard Whitlock said.

Spring setback

Lantmannen's comments came as the co-operative reported a 38% rise to SEK55m in earnings for the first four months of 2013, on revenues up 3.3% at SEK12.0bn.

The rise in profits reflected, besides reduced losses in ethanol, some one-time support, besides a SEK26m hit from the cost of a cost-cutting drive which has helped reduce employees by nearly 400, to 9,800, over the year.

The agriculture division fell to an operating loss of SKE15m, compared with a profit of SEK47m the year before, thanks to "a delay in sales for spring cultivation following the long winter", which affected Scandinavia as well as many other parts of Europe.

However, the co-operative signalled the potential for some revival, with "strong" demand for seeds for spring crops, after heavy autumn rains hampered sowings of winter crops, and with some of the rapeseed that was planted hurt by frost.

"The fall-sown areas of grains and oilseeds in Sweden are 25% less than the average for the last five years," Lantmannen said.

"This meant that there were significantly larger areas than usual for this year's spring sowing."

'Dominated by caution'

In farm machinery, operating profits slumped some 85% to SEK2m, with the extended winter adding to soft market sentiment.

"The machinery market is still dominated by caution, with a significantly reduced investment appetite, and the total market for both farm and construction machinery continues to decline.

"The number of newly-registered tractors is still at a low level, and the financial turmoil continues to have a significant impact on the willingness to invest in agriculture."

In Sweden, the tractor market has shrunk 19% over the past year.