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UPDATE 1-Brazil launches first corn-only ethanol plant, hopes for more

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SAO PAULO, Aug 11 (Reuters) - With a record corn crop in the
silos and Brazil's president on hand, FS Bioenergia on Friday
inaugurated the country's first ethanol plant processing only
corn in the heartland of the South American grains powerhouse.

President Michel Temer was joined at the inauguration by
Agriculture Minister Blairo Maggi, who pledged the government's
support for corn-based ethanol - an innovation in a country that
has long made ethanol more efficiently from sugarcane.

Privately owned FS Bioenergia said the plant will produce
about 240 million liters (63.4 million U.S. gallons)of ethanol
from corn each year, along with 6,200 tonnes of corn oil and
60,000 megawatts of power.

The dignitaries on hand to celebrate the new plant in the
state of Mato Grosso, Brazil's top grains producer, underscores
how eager the country is to find new outlets for its surging
corn production.

"If we had 10 plants like this one, we would be able to
absorb about 6 million tonnes of corn from the market," said
Maggi, who lamented the scarce demand for Brazil's bumper crop
on the visit to his home state. "Current prices do not even
cover production costs."

A second annual corn crop, planted after soybeans are
harvested, has made Brazil the world's second-largest exporter
of the cereal and a major competitor to the United States in
global markets.

The second corn harvest represents about 68 percent of
Brazil's total corn crop. Mato Grosso, where production has
grown exponentially over the years, accounts for almost a third
of the country's total corn output, according to growers
association Aprosoja.

FS Bioenergia is a joint venture between Brazil's Fiagril
Participações and U.S.-based Summit Agricultural Group.

Corn-base ethanol is a novelty in a country producing
ethanol from sugarcane since the government in the 1970s started
its biofuel program to find an alternative to oil-based fuels
during the oil supply shocks. There currently are around 360
cane-based plants.

Producers of ethanol say it is much more efficient to use
cane than corn, in terms of energy used in the process. But
Brazil's ample supply of corn could reduce the gap between both
systems in terms of costs.

(Reporting by Ana Mano and Roberto Samora; Editing by Dan

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