02/08/04 LONDON (Dow Jones)--Encouraging harvest news for EuropeanUnion 2004-05 rapeseed production with high yields and promising qualityand lack of third country export opportunities has seen rapeseed futuresprices on the French Matif plummet over the past three sessions, whileprice outlook for the 2004- 05 marketing year is gloomy, sources said.The Matif rapeseed Nov contract fell to a low of EUR210 a metric tonMonday morning, down EUR14.25 since July 29.The descent is due to a rebound to average to good output levels forthe E.U. to 13.176 million tons, up 20% on 2003-04, when rapeseed outputtotaled only 10.980 million tons due to drought, according to E.U.agricultural lobby organization Coceral.Now yields in Germany, the E.U.'s largest rapeseed producer, haverecovered to around 40 tons per hectare, with some places reporting evenyields of up to 50 tons/ha. "Germany's harvest looks like it's going to bea record one," a trader said.The German farmers' association Bauernverband was more cautious:"Yields are average to good, but differentiated regionally. You need toremember that we've had not one but two bad years for rapeseed, so to makea more correct assessment one needs to make a omparison with results fromthree years ago," she said.In Germany, growing conditions have been markedly better during thiscampaign, even though persistent rain has caused some pods to pop open,she said.In 2001-02, Germany produced 4.16 million tons of rapeseed, while for2004-05, production is expected to reach 4.349 million tons, Coceralsaid. France, the E.U.'s second largest producer with an estimatedoutput of 3.609 million tons for 2004-05, up from 3.324 million tons lastyear according to Coceral, has seen yields of 34 tons/ha, up from 30.8ton/ha, so that some analysts peg production at more than 3.7 milliontons.Higher production levels are likely to inflate end stocks due to lackof export demand from third countries such as Japan and India, whichunderpinned E.U. rapeseed prices in the past.This is due to the historically strong euro, so that most trades willonly be on an intra-E.U. level, traders said, with added price pressurefrom accession countries such as Poland, where rapeseed output is expectedto increase sharply by between 45% and 63% to around 1.25 million tons,according to recent Polish government data."Expect a total price plunge for 2004-05, while we're totallydependent on the rise and fall of soy prices on the U.S. market. The onlyimprovement I can see is through a rise in prices on there," a tradersaid.A rise in rapeseed use for production of biodiesel may offer somesupport but farmers are allowed to plant rapeseed on set-aside areas fornon-human consumption, curbing inroads for surplus rapeseed production.Further, oil crushers are seen covered for the next three to fourmonths, and are likely to keep fresh buying to a minimum in theexpectation of falling prices.Farmers on the other hand are usually keen to sell rapeseed soon afterthe harvest, as it is harder to store than a drier crop such as wheat,sources said.