"Corn cannot conceivably handle the displacement of gasoline in the US anymore than crop-based ethanol can keep pace with global gasoline consumption without running out of steam," the report added.

The global biofuel sector has been growing at a dizzying pace as motorists seek cheaper alternatives to high-priced oil, with ethanol output in the United States -- the world's largest consumer of energy -- expanding rapidly.

Corn is the feedstock of choice for the US ethanol industry, while Brazil has been using the vast quantities of sugar it produces to make the clean-burning green fuel.

Oil squeezed from soybeans and oil palm are being used to produce biodiesel. In both the cases of ethanol and biodiesel, the prices for the feedstocks like corn and sugar have soared.

The BioWorld report said ethanol production in the United States topped the 1 billion gallon annual production mark with 1.1 billion gallons in 1992, and that production is expected to rise to around 4.3 billion by end of 2006.

"Yes, this is progress, but is put into perspective when considering that in the US alone, gasoline is being consumed at an annual rate of 145 billion gallons," the report said.

It said that while ethanol is the market placeholder today, cellulosic ethanol represents the evolution of the technology into the immediate future of six to 40 years.

Exports at a conference earlier this month in Chicago said many investors have been reluctant to finance new cellulosic ethanol plants, which are costlier than corn-based plants, due to the extra steps needed to break down cellulose into sugars before they can be processed into fuel.

They said machinery needed to harvest and compact cellulosic material such as agricultural waste for shipment are still being developed and streamlined.

The report said based on current models and trends in legislative, investment and production dynamics, BioWorld estimates the market for cellulosic to have a production value of 20 billion gallons annually in 2020.

"Any product that could be blended into, or even replace, gasoline as the fuel of choice for the millions of automobiles in use on the roads, stands to share or inherit immense market share," the report said.

The report said it is possible that corn farmers may be unequipped to handle the demand for biofuels feedstock if the ethanol market grows by triple digits over the next two years, as may be the case, according to the current growth rate.