Linked In
News In
Linked In

You are viewing 1 of your 2 complimentary articles.

Register now to receive full access.

Already registered?

Login | Join us now

Rapeseed rally turns biofuel plants to cooking oil

Twitter Linkedin

The high prices of rapeseed, boosted by sagging crop expectations, are prompting European Union biodiesel plants to turn to animal fat and used cooking oil for feedstock in an effort to support profitability.

High EU rapeseed prices - supported by a succession of poor harvests and forecasts for another one - have cut margins for processing the oilseed at the region's biodiesel plants from a recent high of $110 a tonne early in 2010 to $40-60 a tonne for 2011-12, according to the UK's HGCA crop bureau.

Margins have been squeezed both by softer energy prices - with Brent crude standing below $119 a barrel on Wednesday, nearly $10 a barrel below its early March high - and firm rapeseed prices underpinned by a series of downgrades to hopes for the EU rapeseed crop.

"Crushing plants are running at about 60-70% capacity," said Willie Wright, oilseeds trader at Gleadell, the UK crop merchant.

"There is a lot of pain in crushing at the moment."

Any old oil

Europe's squeezed crushing margins, highlighted by crushing giants Archer Daniels Midland and Bunge in quarterly results, are prompting biodiesel plants to turn increasingly to tallow, a byproduct of animal rendering, and cooking fat as sources of the methyl ester turned into biodiesel, besides using alternative vegetable oils such as palm oil.

"Usage of tallow and used cooking oils, cheaper sources of oil, has replaced rape oil methyl ester usage in EU biodiesel," HGCA market specialist David Eudall said.

"The other advantage of using cooking oil is that they attract a double credit in terms of renewable energy targets," he told

"In essence, one tonne of methyl ester from tallow and used cooking oil will count as two in renewable fuel blending obligations."

Already, used of fats such as tallow in making biodiesel rose from 1.9m tonnes above 2m tonnes in 2011, which, with a 40% jump in use of palm oil, helped replace some of the reduction of 800,000 tonnes, to 5m tonnes, in consumption of rapeseed oil.

Crop downgrades

The comments followed the latest in a series of downgrades to the EU's 2012 rapeseed harvest, the world's biggest, after Oil World on Tuesday cut by 270,000 tonnes its forecast for the crop, to a six-year low of 18.21m tonnes.

With consumption of 20.8m tonnes, this will require imports rising to 3.30m tonnes in 2012-13, up from 3.16m tonnes in the current season.

And other commentators foresee an even bigger squeeze on EU supplies.

"According to our analysts, production could be below 18m tonnes leading imports around 3.5m tonnes," Agritel, the French-based consultancy, said on Wednesday.

Last week, Strategie Grains analysts cut their forecast for the EU rapeseed crop to 17.6m tonnes.

'Uncanny ability'

However, Mr Eudall added that the final harvest may yet surprise analysts – if the weather improves.

"The winter really hurt crops in some countries, particularly Germany and Poland," he said.

"But rapeseed does have an uncanny ability to bounce back, given the right conditions, and we are still a while from harvest."


Twitter Linkedin
Related Stories

Evening markets: South American double whammy brings ags back down to earth

Ags lose early gains, undermined by a tumble in Brazil’s real, and falling rain in Argentina. Still, wheat futures remain in positive territory

Wheat leads respectable week for US crop exports

Sales of hard wheat - spring and winter - prove particularly strong. Cotton export data return to type - ie with strong sales but...

Can cotton prices extend their rally?

History suggests futures will not stay long in the 70s cents a pound. So which way will they trend?

Morning markets: Hard wheat regains premium over soft, amid US dryness worries

Kansas City wheat outperforms, as Plains precipitation worries extend to a dearth of snow cover. But Kuala Lumpur palm oil hits a 16-month low
Home | About | RSS | Commodities | Companies | Markets | Legal disclaimer | Privacy policy | Contact

Our Brands: Comtell | Feedinfo | FGInsight

© 2017 and Agrimoney are trademarks of Agrimoney Ltd
Agrimoney is part of the Briefing Media group
Agrimoney Ltd is registered in England & Wales. Registered number: 09239069