SUPPLY / DEMAND MAY HELP CANADA CANOLA FARMERS - ANALYST

WINNIPEG Feb 26 (Reuters) - Depressed canola prices may rise in the comingyear because of growing world oilseed demand and declining world canolaproduction, a leading oilseeds analyst said. Those factors should beenough to overcome the effect of large world vegetable oil stocks andexpected record soyabean production this year, Thomas Mielke, editor ofthe German publication Oil World, told a grain outlook conference here."We think that even if the Canadian farmers reduced plantings by 10percent we won't have enough rapeseed and canola for next season," Mielkesaid.Analysts with Oil World are anticipating Canadian canola acreage todecline by nine percent in 2001 / 02 which could result in a crop of about6.4 million tonnes this autumn. In 2000 / 02, Canada produced 7.12million tonnes of canola. Statistics Canada will issue its first estimateof this year's canola seeding intentions on April 24.Mielke said while Canadian farmers might be tempted to reduce acreage thisyear because of low prices, he urged them to be patient. "It may beadvisable not to look at the current prices. The current prices tell yourfarmers, we don't need your canola, so cut back," said Mielke.But, he said, if farmers look ahead, "then the conclusion may be we haveto keep canola plantings unchanged or higher so that they're ready for thedevelopments which are generated from insufficient production in the restof the world."Globally, the world oilseed price outlook was favorable. Mielke citedconsiderably smaller rapeseed production in the European Union in 2000 /01 combined with a rise in European demand for rapeseed for bio-diesel.He pointed to falling oilseed production in India, where production wasslated to fall to 19.38 million tonnes in 2000 / 01 from 21.26 million ayear earlier. Mielke also said China was leading demand higher. For theyear ending in September 2001, Chinese soyabean crushings would total 18million tonnes, up from 11.3 million two years ago.He said Canada should benefit from the overall global trends, anticipatingincreased canola exports of 500,000 to 600,000 tonnes to China, Mexico andJapan from the amount sold last year.

REUTERSMRAG/hh.02/03/01

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