Use of rapeseed for making biofuels in the European Union is to stagnate at levels 20% below its high four years ago, but consumption of wheat, which has been replaced by corn, may revive thanks to lower prices.
Consumption of rapeseed oil by biodiesel manufacturers faces pressure from both reduced demand for the biofuel, and increasing use of other vegetable oils, US Department of Agriculture staff said.
Demand for biodiesel – the most important EU crop-based fuel, accounting for about 80% of total biofuels use in transport - will stagnate at 12.28m litres, down 1.79m litres, or 12.7%, on its 2011 high.
"For 2014 and 2015, consumption is expected to remain flat, as diminishing demand in Germany is compensated by increases in the UK, the Benelux [countries], and Ireland, and a rebound in Romania," the USDA staff said in a report.
A change in German biofuel accounting rules is seen as switching demand to bioethanol, while other countries, such as Spain, have already reduced mandates for biodiesel consumption.
EU production of biodiesel will at least show small growth, edging 1.0% higher to 11.0m litres in 2015.
Nonetheless, use of rapeseed oil will drop, hurt by substitution with alternative vegetable oils, notably palm oil and soyoil.
At 5.5m tonnes in 2014 and 2015, rapeseed oil consumption will come in 20% below levels reached at a high actually set in 2010, of 6.88m tonnes.
"Rapeseed oil is still the dominant biodiesel feedstock in the EU, accounting for 58% of total production in 2013," the briefing said.
"However, its share of the feedstock mix has considerably decreased," having hit 73% four years ago, before being undermined by the relatively low price of palm oil, which has been championed by the Neste Oil biodiesel plant in the Netherlands.
The forecast would appear to augur badly for values of rapeseed, EU farmers' preferred oilseed, with plants to use the equivalent of 13.8m tonnes of the crop for making biodiesel in 2014 and 2015, of which some will be imported.
The EU is expected to produce a record 22.5m tonnes of rapeseed this year, Strategie Grains said this week, although some of this is used in food making too, besides producing meal for livestock feed.
Rapeseed on Wednesday stood at E334.25 a tonne in Paris, down 0.5% on the day, and touched a four-year low of E333.25 a tonne in the last session.
However, the USDA staff had some moderately brighter forecasts for grain growers, foreseeing EU demand for ethanol recovering to 6.6m litres next year, close to its record high in 2011, and with biofuel made within the block accounting for an increasing proportion of supplies.
"A temporary production increase is forecast to take place in the UK and Germany, based on increased availability of feedstock and a growing domestic market for bioethanol," the report said.
The UK last year became the EU's second-ranked bioethanol user, behind Germany, overtaking France, which has become the bloc's top biodiesel market.
The recovery in production of the biofuel will favour in particular use of wheat, historically the EIU's top feedstock for bioethanol plants, but which has fallen behind corn.
"Due to the abundance on the world market, corn prices fell, and [ethanol] producers in north western Europe switched to imported corn in 2013," largely bought in from Ukraine.
"Depending on the 2014 harvest," producers may switch to wheat, the report said, forecasting a rise of 3.8% to 3.06m tonnes in use of the grain this year, and a jump of 25% to 3.83m tonnes in 2015.
Nonetheless, this is only a small amount compared with the size of the EU wheat harvest, expected to exceed 145m tonnes this year.