ANALYSIS - Weather Thwarts Boost in EU Rapeseed for Biofuel
Date: 13-Aug-07
Country: UK
Author: Nigel Hunt
Farmers planted more rapeseed in key producing countries such as France, Germany, Britain and Poland hoping to cash in on the biofuels boom but yields have been disappointing and some may now cast an envious eye on record wheat prices.
"There is a risk that farmers sow less rapeseed. We'll have to keep close tabs on what happens in the autumn," a French trader said.
The expected strong advance in demand for rapeseed oil to make biodiesel also stuttered this year with the industry in Germany particularly badly hit by tax changes and subsidised imports from the United States.
French rapeseed futures have risen by around 25 percent since April, far behind milling wheat's dramatic 70 percent jump over the same period.
In France, rapeseed production may be set to grow by 10.6 percent compared to last year, the farm ministry's statistical unit SCEES said on Thursday, but this would be disappointing given enlarged areas dedicated to the crop.
Unfavourable weather and disease had harmed rapeseed in the final phases of plant development, analysts said.
This was taken into account by SCEES, which slashed its 2007 rapeseed crop estimate to 4.6 million tonnes from the 4.9 million tonnes seen in July.
HARVEST RAINS
Germany's rapeseed crop is likely to be down this year following rain during harvesting in July and August on plantings already weakened by a drought and heatwave in the spring.
Analysts' forecasts of this year's harvest range between 5.1 to 5.3 million tonnes, down from 5.34 million tonnes last year despite a seven percent increase in planted area.
Harvesting is now all but finished.
The most pessimistic forecast of 5.1 million tonnes comes from German oilseeds analysts Oil World.
"Given the expanded German rapeseed crush and biodiesel production capacity, this creates a rather tight supply situation, despite a relatively high carry-over (stock) from last year's crop," Oil World said.
But other analysts were unsure, saying the key will be the future of Germany's biodiesel industry, which faces a further rise in biodiesel taxes in January 2008. German biodiesel is mainly produced from rapeseed oil.
Britain's rapeseed crop is up to 90 percent harvested with yields running below last year but output is expected to be up due to a sharp increase in area sown, industry sources said.
Yields were running about 10 percent below last year during the first half of the harvest but farmers co-operative Grainfarmers reported some improvement during the last week.
UK rapeseed production is set to exceed last year's 1.87 million tonne crop, even if yields fall, with area expanding by around 16 percent partly due to biofuels demand.
In Poland, the rapeseed crop will be near record levels due higher planted areas but yields have been disappointing, said Marian Piotrowski, a rapeseed buyer for a large biofuel company.
"The forecasts showed 2 million tonnes of rapeseed crop. We will not reach this level. However, the harvest should be between 1.8 and 1.9 million tonnes," he said.
Hungary harvested 487,000 tonnes of rapeseed in 2007. That compares to 330,000 tonnes last year according to data from the Central Statistics Office. But the average yield fell to 2.18 tonnes/ha from 2.34 tonnes last year.
"The rapeseed crop caused the biggest disappointment for farmers on a nearly nationwide scale. It was still looking good in May and early June but...the crop turned out to be weak due to the drought," the ministry said.
