22/10/04 - Rapeseed and Products 2004/05 world production of rapeseed &canola has turned out higher than expected hitherto and will be up sharplyby 3.7 Mn T. But the bearish effects of very high supplies (primarily inEurope) are largely offset by the unusually strong demand for rape oil. Itis mainly the additional demand for biodiesel which has boosted rapeseedcrushings to full capacity in the EU-25 since September. Still, rape oilprices continued to strengthen in Europe to around US$ 670 for nearestforward shipment. At that level they command a premium of around $ 110vis-a-vis soya oil. With mineral oil prices trading above US$ 50 perbarrel, biodiesel producers are enjoying a very profitable situation andvery high margins with current rape oil prices. It can be assumed that aslong as mineral oil prices stay so high, biodiesel production willcontinue at an unusually high level. With new capacities having come onstream, we realize that our previous demand estimates for rape oil in theEuropean Union need to be revised upward. We will publish the results ofour analysis - - including more details on European biodiesel capacitiesand prospects for 2005 - - in the special study Prices in the RapeseedComplex which we are currently preparing. (You are invited to contactinfo@oilworld.biz or visit us at www.oilworld.biz for further details.)The developments in sunflower oil and rape oil will raise world demand forsoybean oil and palm oil and will, in our assessment, contribute toappreciating prices in the medium term.