Global targets to increase biofuel use need to be reduced as the vegetable oil and oilseeds markets cannot cope with the extra demand for biofuel raw materials, Hamburg-based oilseeds analysts Oil World said.
"A reassessment of government biofuel policies is necessary worldwide," it said. "The recent national biodiesel usage targets and capacity expansions have been far too optimistic." Even higher biofuel blending targets and quotas will come into effect in 2008 and following years, creating a burden of additional demand the oils and fats market cannot cope with, at least in 2008 and 2009, it said.
"(Edible oil) prices have reached such high levels that governments should begin to reconsider their current biodiesel usage targets," it said. "It is our opinion that these targets need to be curbed with the aim of slowing the growth in world production of biodiesel in the medium term."
Prices of most oilseeds oils and fats including soyaoil, rapeseed oil and sunflower oil have risen strongly so far in October, it said. "The explanation is simple: World production cannot be increased quickly enough to keep pace with the unusually strong demand," it said.