The Market

Growing demand

• Demand from China, India and Pakistan (all net importers) due to population and wealth growth could place pressure on supply in coming years;
• EU mandated biofuel volume targets will increase demand for all biofuel feedstocks. Rapeseed is a favoured feedstock for biodiesel as it delivers a good oil yield and holds a sustainability advantage over South American rape and palm oil, due to the surety of land heritage. Oil Seed Rape also produces a more stable biodiesel product than used cooking oil (UCO) or tallow based biodiesel, which can suffer from quality issues during cold temperatures; and
• If political pressure mounts on food producers to move away from palm oil, they will be required to look for alternative vegetable oil sources, such as rapeseed oil.

Growing supply

• New strains of rapeseed and new methods of farming are forecast to produce yields of up to 5 tonnes per hectare inEurope(up from 3 tonnes) within the next five to ten years. This will increase supply and could put downward pressure on price, although demand will probably outstrip this effect;
• If the price and security of demand for rapeseed increases, comparative to other crops, then farmers may switch land use, or increase yields through more aggressive use of fertiliser; and
• Eastern European states are believed to have additional capacity to produce crops such as Oil Seed Rape, if markets exist outside their own countries. It is probable that if the price justified it and there was secure demand, then farmers in coastal countries such as Poland, Latvia, Lithuania and Estonia would increase Oil Seed Rape production through change in land use, or increased investment in farming productivity (machinery and fertiliser).