10/10/2005 (Comtex International) - Winnipeg, MB (Resource NewsInternational via COMTEX) -- The European Union is expected to take moreCanadian canola oil over the next year, driven by an increasing demandfrom the bio-diesel sector, said sources.

The interest in vegetable oil for use in bio-fuels has seen an incredibleincrease recently, according to one Canadian canola crusher official. Hesaid the inquiries coming in were from Europe and around the world, butadded that the potential demand from the bio-fuels sector would faroutweigh Canada's current crush capacity.

The crusher source said Europe would be a nice market to move canola oilinto, especially as it shouldn't have to be non- GMO when destined for thebio-fuels sector. The crusher thought European demand for bio-diesel wouldhelp increase prices for lower grade canola oil.

Hamburg based oilseed analysts Oil World have estimated that the EU willimport 160,000 metric tons of rapeseed/canola oil in 2005/06 (July/June),up from only 41,000 tons the previous year, according to sources. Of thetotal, 75,000 tons is expected to come from Canada.

Oil World said that about 40,000 to 50,000 tons of Canadian canola oilhave already been purchased, and a ship carrying about 25,000 tons leftVancouver destined for Germany in September.

Export sources thought ADM had made the canola oil sales to Europe,although ADM officials were unavailable for comment.

While it may be closer to ship the canola oil to Europe from easternCanada, there is no capacity to ship tanker oil on the east coast, makingVancouver the logical choice, said a Canadian canola exporter. While theocean freight may be expensive, "subsidies and bio-diesel are resulting insome strange things happening. We get one or two calls a day looking forsome input on the bio-diesel sector, it seems to have caught the world bystorm," said the exporter.