Rapeseed prices have now reached such high levels that demand for rapeseed oil-based biodiesel for blending with fossil fuels could be cut in coming months, Hamburg-based oilseeds analysts Oil World forecast on Tuesday. Oil companies are compelled to blend biodiesel, largely made from rapeseed oil, with fossil diesel in several European countries as part of environmental protection programmes.
"We are already close to the trigger point at which the mineral oil industry will stop fulfilling the admixture mandates for biodiesel and instead pay the penalty for non-fulfilment," Oil World said. Benchmark European rapeseed prices in Paris have surged to 34-month highs largely because of global weather supplies and spillover support from firm soyabean prices.
Paris February delivery rapeseed was at 509 euros a tonne at 1053 GMT on Tuesday, up from around 280 euros in January 2010. "Non-fulfilment of the biodiesel admixture mandates will be a key factor to watch in coming months," Oil World said. Because of the large volumes of rapeseed oil-based biodiesel used for blending, such a move could weaken rapeoil demand and so curb rapeseed prices unless crude oil prices also rise, it said.
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