June 21, 2007

Biodiesel demand to accelerate EU 2007/08 oilseed production

The surge in demand for biodiesel has hastened the demand for oilseed production in the EU-27 member nations, according to a report released by the US Department of Agriculture. Having reached three consecutive years of record harvests, production is again seen to hit another all-time high 972 million tonnes in marketing year (MY) 2007/08 as compared to previous season.

The increasing demand for sunflower seed and rapeseed has encouraged expansion as the entry of two EU members, Romania and Bulgaria stepping up their production of sunflower and rape seeds.

The USDA sees this year's total crushing capacity for EU-27 at 1,760 million tonnes to 48,330 tonnes, mostly for rapeseed. MY 2006/07 oilseed crush was at 46,570.

Earlier projection saw total area harvested for 2007/08 oilseed production has jumped to 10,728 million tonnes from the last year's 10,407 million tonnes. Oilseeds forecast for food use has also upped by 1,120 million tonnes from the former projection of 1,103 million tonnes. Oilseed-sourced feed, however, is seen to drop by 3,491 million tonnes from last season's 3,746 million tonnes.

For soybeans, the USDA predicts a decline for this year's crop to 930,000 million tonnes due to Romania's restriction on planting genetically-modified soybeans as well as a drop in production in Italy. Romania used to account at least a third of soybean production in the EU but the region's apprehension on using genetically-altered crop has cut the country's production upon its accession to the bloc. Imports are also seen to increase marginally by 1.25 million tonnes. Soybean crush is expected to increase in Germany, Spain and Italy due to biodiesel.

Soybean meal consumption is steadily seen due to the increased supply of cereals. Belgium, the Netherlands and Luxembourg, also known as Benelux countries, cereals use for feed is expected to recover due to heightened demand for soybean meal. On the contrary, soybean meal demand in France is seen to drop due to increasing availability of rapeseed and in Poland because of its reduced numbers of livestock.

For more of the USDA report, please click here.