Poor rapeseed crop deepens cloud over EU biofuels
The European Union's disappointing rapeseed harvest looks set to feed a jump in biodiesel imports, worsening prospects for the bloc's own biofuels plants, which are already in a "critical situation".
While declining to put a figure on their estimate, US Department of Agriculture attaches in the EU warned that a "shortage" of rapeseed oil "could trigger an increase in imports of biodiesel from countries like Argentina and Indonesia" into 2012.
Argentina, the third-ranked producer of soybeans, is turning an increasing proportion of its soyoil into biodiesel to capture value gained from the processing chain.
Indonesia is the top producer of palm oil, another biodiesel source, albeit with a higher freezing point making the vegetable oil a less useful biofuel feedstock for colder countries.
Biodiesel imports were likely to prove especially strong in EU countries which have not implemented rules on sustainable sourcing for biofuels, the attaches added.
The comments follow an estimate from Oil World, the German-based oilseeds analysis group, that EU imports of biodiesel in calendar 2011 will jump 21% to 2.52m tonnes.
Imports from Argentina will soar 28% to 1.33m tonnes.
The competitiveness of imports against the EU's supplies - whose price are inflated by the impact of poor harvests in raising the costs of rapeseed, the main feedstock – has left many biodiesel groups in a "critical situation" with a risk of closures, the European Biodiesel Board industry group has warned.
The board estimates that biodiesel plants are operating at only 44% of their capacity, of 22.1m tonnes.
The bloc's bioethanol industry is also under pressure, thanks to historically high prices of its main feedstock, wheat and rivalry with cheap US ethanol, although a shake-up in tariffs looks set to make America's exports less competitive in Europe.
The USDA attaches estimated EU rapeseed imports rising 16.6% to 3.0m tonnes in 2011-12, an extra 350,000 tonnes on the department's official forecast, to fill some of the gap left by a disappointing harvest.
The bloc's rapeseed harvest fell this year for a second season, by 1.3m tonnes to 19.4m tonnes on attaché estimates, "mainly as a result of lower production in Germany, Poland, Romania and Denmark".
Imports of rapeseed oil, the raw material for biodiesel, will also rise more than the USDA is expecting, by 36% to an all-time high of 750,000 tonnes.
Even so increased imports of the oilseed itself from Ukraine, Australia, and Canada "will not fully offset lower EU rapeseed production", the attaches said in a report.
Rapeseed vs sunflower seed
Indeed, the tightness in supplies, reflected on the world market, will prompt a "partial shift" to the sunflower complex, following a record EU harvest, estimated by the attaches rising 15.2% to 7.95m tonnes.
Because the price for rapeseed oil is expected to remain high, it is likely that consumption of sunflower oil will increase," the attaches said in a report.
The bumper sunflower crop reflects "good" weather, which "resulted in excellent yields", besides rising sowings in Bulgaria, France, Romania and Spain.
"Significantly higher sunflower production is being reported in France, Romania, Portugal and Spain," the briefing said.