AMSTERDAM, April 19 (Reuters) - Rapeoil prices could stagnate, due to abigger European rapeseed crop, unless biodiesel demand in Germany picksup, traders said on Friday.Supply problems for Argentine oilseeds could spark price spikes, butthey would probably be brief since huge South American crops willeventually come onto the market.Nearby rape oil prices in Europe have eroded so far this year, withoffers declining from a high of 525 euros in January to 460 euros onFriday.Last year rape oil rallied by 50 percent over 12 months, climbingsteadily on tight supplies from 350 euros in January to a peak of 530 inDecember.But the EU rapeseed crop is likely to hit a three-year peak in 2002,rising 10 percent to 9.85 million tonnes, newsletter Oil World said thisweek.It had been hoped that an expanding biodiesel sector in Germany wouldhave an increased appetite for rapeseed, mopping up any excess supply.The German association for the promotion of biofuels, UFOP, estimatesGerman biodiesel output in 2001 at 492,000 tonnes and expects newrefineries under construction to increase the total to around 800,000tonnes in 2002/2003.

HIGH STOCKSBut traders say German oil mills and producers of biodiesel fuel fromrapeseed have good supply and have faced low demand for their products."I have the impression that offtake of biodiesel is not as adequate aseverybody was expecting. The mills are only running at partial capacity,"a German trader said.Many German biodiesel producers are in a fix since they had alreadypurchased rapeseed at expensive levels, traders said."What they have been buying has been at too high a level consideringpresent diesel prices. It doesn't calculate. They are still storing ithoping the markets will increase again. that's why stocks are high," onesaid.Rapeoil stocks in Rotterdam have also surged since early February, whenthey hit a low of around 38,000 tonnes. By this week they had increased to63,504 tonnes, up 4,779 tonnes, and the previous week they added 4,916tonnes.

CONSUMERS ON SIDELINESConsumption of rapeoil for human consumption was also weak, with buyersalready well stocked through July, traders said."Trade has been very, very quiet, only some limited quantities tradednow and then. They are not in a hurry to buy more since they hope to takeadvantage of harvest pressure in the summer to buy at lower prices," aDutch trader said.The premium of rapeoil over soyoil has narrowed to around 40 euros from70 euros in January and 100 euros last year as supply worries fromArgentina boosted soyoil prices.Tightness of soyoil would bolster rapeoil, but any shortages were onlylikely to be temporary since bumper soy crops in South America might bedelayed, but will not disappear, traders said.

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