Oil World predicts growth in global biodiesel production will decline

The German-based oilseeds analysts Oil World said that global biodiesel production is beginning to decline after being strong for several years.
According to Oil World, “The growth dynamics have been lost in July/December 2012, when many important producers reduced their output of biodiesel. This is true primarily for Argentina and the United States but also to a smaller extent for Brazil and the European Union.”
Although biodiesel production will still rise by 0.9 million tons to 22.92 million tons in 2012, analysts predict that the increase would be lower than the 3.7 million ton increase in 2011, as well as the average 2.9 million ton rise in the last five years.
Oil World analysts said the record high soybean prices during the summer, which was caused by poor U.S. and South American crops, have made soybean less attractive as a source of biodiesel.
Aside from this, the European Commission instigated a major policy shift in September and announced that it plans to limit food crop-based biofuels to 5% of consumption because of speculation that biofuel output has been responsible for rising global food prices. In response to the announcement, European biofuel producers said the change in policy could ruin their business and bring an end to production of biodiesel from rapeseed in Europe.
Oil World’s forecasts for 2012 include the following:
•EU’s biodiesel output for 2012 will fall to 9.0 million tons from 9.13 million tons in 2011, signaling the end of a long period of growth.
•In 2012, biodiesel production in the U.S. will still reach 3.48 million tons, up from 3.29 million tons in 2011; but July/December 2012 output would most likely fall by 0.36 million tons year-on-year. Oil World said the outlook for 2013 is not positive.
•In 2012, Argentina’s output will reach 2.45 million tons, up from 2.43 million tons in 2011. However, the country’s output will be down from a 0.6 million tons increase in 2011 mainly because producers face a sharp decline in export sales and a massive reduction of domestic consumption of biodiesel.
•Following the poor soybean harvest in 2012, high soy oil prices will reduce Brazil’s 2012 biodiesel output to 2.29 million tons, from 2.35 million tons in 2011. (December 11, 2012)