31/1/07 HAMBURG,  (Reuters) - Low biodiesel sales, especially in Germany, are depressing European rapeseed and rapeseed oil prices, Thomas Mielke, CEO of German oilseeds analysts Oil World, said on Wednesday.
   Biodiesel demand in the German market had collapsed, Mielke said.
   Fuel station prices for biodiesel had been too high since early January compared with fossil diesel, he said, and so rapeseed and rapeseed oil prices had been weak.
   Germany's introduction of compulsory blending of biofuels with refined fossil fuels at the start of 2007 had not been enough to compensate for falling biodiesel sales at fuel stations, he told the Rapool rapeseed conference.
   Germany's 2006 biodiesel sales at fuel stations fell to 476,000 tonnes from 520,000 in 2005 following the government's decision to tax biofuels, biodiesel association AGQM said separately on Wednesday
   "The biodiesel industry is complaining about negative margins caused by high vegetable oil prices, higher taxes since early January, the fall in fossil oil prices and over-capacity," Mielke said.
   "Germany's market is currently displaying over-capacity in biodiesel. This has led to a reduction in production and an increase in rapeseed oil stocks.
   "As a result we are seeing a reduction in rapeseed processing and so pressure on rapeseed prices."
   EU annual biodiesel production capacity was almost 7.0 million tonnes at the end of 2006, up from 4.6 million a year earlier, he said.
   German capacity rose to an estimated 3.3 million tonnes, up from 1.2 million two years earlier.
   "The capacities exceed current biodiesel consumption," he said. "In addition the industry is confronted with increasing biodiesel imports."
  
   PRICE OUTLOOK GOOD
   But current rapeseed price weakness was expected to be brief and the medium-term outlook was positive, he said.
   "It is to be expected that inside the next three to six months, rising prices in the world market -- especially for soybeans, soyoil and palm oil -- will bring renewed price strength to rapeseed and rapeoil here in Germany," he said.
   Global consumption of the eight main vegetable oils this year would exceed production, he forecast.
   U.S. farmers were expected to substantially increase corn plantings because of high corn prices caused by the strong U.S. bioethanol production.
   Farmers were expected in turn to reduce soybean and cotton plantings, which would be bullish for rapeseed prices, he said.