ADM hopeful on ethanol, may bid on bankrupt plants

* ADM optimistic on ethanol as RFS targets left intact

* Will be selective in buying bankrupt ethanol plants

* Plant acquisitions need to be "right price, right fit" (Recasts, adds details, CFO comment)

By Karl Plume

CHICAGO, May 13 (Reuters) - U.S. agricultural processor Archer Daniels Midland Co (ADM.N) said on Wednesday it was "cautiously optimistic" about the struggling ethanol industry because U.S. law still mandates its use.

The ethanol industry had been worried that the U.S. Environmental Protection Agency would scale back requirements for ethanol use in a new draft Renewable Fuels Standard this month, but it left its annual blend targets intact.

"We do know that the RFS fuel standard will increase to 12 billion gallons in 2010," Steve Mills, chief financial officer at ADM, said at the BMO Capital Markets' Agriculture, Protein, and Fertilizer conference in New York.

He was referring to the mandated increase to 12 billion gallons of current generation biofuels for blending into gasoline in 2010 from 10.5 billion gallons in 2009.

The law requires 36 billion gallons of biofuels to be used in 2022, most of it next-generation biofuels made from non-food sources.