10 August 2012 18:24 [Source: ICIS news]
LONDON (ICIS)--The 2012/2013 European rapeseed crop has been pegged slightly higher at an estimated 18.5m tonnes, up from 18m tonnes last month, in a crop projections report released on Friday by the United States Department of Agriculture (USDA).
Rapeseed, the raw feedstock for the biodiesel grade rapeseed methyl ester (RME), is currently being harvested in Europe and the UK, with hot and dry conditions in the southeast and overly wet conditions in the northwest resulting in lower crop yields.
While overall production rates are still on a five-year low, today’s USDA report has lifted crop estimates by 500,000 tonnes on last month.
Despite the increase in rapeseed crop estimates, the RME premium was trading around $50/tonne (€41/tonne) higher on Friday at around $310-330/tonne free on board (FOB) Rotterdam.
Sources said while the outlook for rapeseed production in Europe had improved, the USDA report downgraded its projections for the US soybean and corn harvest yields.
While US soybean and corn are not directly linked to the European biodiesel market, the crop estimates pushed up the prices of soybean and corn, which widened the bean oil-gasoil (BOGO) spread, which in turn influences European biodiesel pricing.
RME is the only biodiesel grade to predominantly source its feedstock within Europe. Soybean and palm oil are imported from South America and Asia and imports are projected to remain steady on last month’s estimates of 5.5m and 500,000 tonnes respectively.
The USDA report slightly lowered its projections for industrial domestic use of palm oil and rapeseed oil in Europe. However, soybean oil industrial use is projected to rise slightly.
($1 = €0.81)
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