January 12, 2007

 

USDA: Oilseed production in EU25 record level; Shift to multiseed crushing

 

 

Oilseed production in the EU25 is again reaching new record levels, propelled by the demand for rapeseed oil from the biodiesel industry, says the US Department of Agriculture report.

 

The demand for rapeseed, the most important oilseed in the EU, has encouraged expansion of rapeseed area.  Rapeseed production for 2006-07 is now estimated at 15.748 million tonnes, as planted area is larger than previously expected.  However, yield per hectare is slightly lower than expected due to adverse weather conditions this year.

 

Currently the crushing is expected to be 16.318 million tonnes, an increase from earlier forecast, according to the USDA report.  Major suppliers for EU rapeseed imports are the Ukraine, Russia, Romania and Croatia.  Australia might not be able to send any rapeseed to the EU this year given the short crop resulting from their recent drought.

 

Production of soybeans in the EU25 is higher than earlier forecast, this would be a combination of a bigger area planted with soybeans and a higher than expected yield per hectare.  Imports of soyoil to the EU25 are also expected to be higher than earlier forecast. 

 

Much of the crushing capacity in the EU25 is moving toward multiseed crushing rather than specific soybean crushing, says the agency report. This change implies adding an extra treatment that the seeds have to go through before they enter into the existing crushing establishment. 

 

Soyoil for years has been used to make biodiesel in Italy. The soyoil mainly goes in "summer" biodiesel since it would be too much of a risk in winter because of crystallisation.  This explains the strong price rise in soyoil in northern Europe since last April.

 

Imports of US soybeans and products have been dramatically low in 2005-06.

 

The EU has turned into a major importer of rapeseed oil with Canada and the US being its major sources. When vegetable oils are imported to the EU they only fall under the GM legislation if they are used for food and feed.  Therefore vegetable oils from GM oilseeds can be imported to the EU as long as they are used for industrial purpose.

 

Soyoil imports could be far larger than previously anticipated this season  with  most coming from South America, says the report.  Oil World has reported that EU soyoil imports from third countries will increase sharply and might reach 700,000 tonnes in 2005-06, up from 191,000 tonnes in 2004-05.

 

The higher rapeseed estimate had little effect on prices in Germany.  However, revised USDA soybean crop estimate resulted in lower oilseeds prices on the world market, which in turn put pressure on rapeseed prices in Germany.  In France though, prices increased and are likely to reduce crush margins and biodiesel processors may use a higher share of palm oil and soybean oil than expected, at the expense of rapeseed oil. 

 

Despite this, the domestic demand from the animal feed sector remains strong, as wheat prices are currently higher than rapemeal prices.

 

Biodiseal production in the EU is expected to grow from 2.9 million tonnes in 2005 to 6.1 million tonnes in 2007 with Germany accounting for the largest share.

 

Experts in Poland believe that Poland will be able to meet the EU goal of 5.75 percent biofuel by 2010.

 

For the full USDA report, please click here.