Raw material supply risks in the European biofuel industry

ICIS said that various weather disasters have caused a loss of about 2 billion euros in European agricultural income, rapeseed, corn, sugar beets and other core biofuel raw material production forecasts have been lowered, the global supply of raw materials in the context of tight, European biofuel companies profit margins or will continue to be under pressure. overuse rainfall and soil systems aquatic environments accumulation in parts of Western Europe in spring, and persistent heat waves during the critical summer grain filling period, a series of abnormal weather have caused major grain and oil producing areas in Europe to reduce their production expectations.

The European Grain and Oil Trade Association sharply lowered its output forecast COCERAL: the total grain output of the 27 EU countries and the UK is expected to drop to 0.2866 billion tons in 2026, compared with the previous estimate of 0.2955 billion tons, far reduce than last year's 0.31 billion tons. The total output of wheat in the EU and the UK is expected to be 0.1408 billion tons, down from 0.1498 billion tons in the previous year. France, Hungary and other major producing countries corn production declined significantly. COCERAL forecast the total output of EU plus UK corn is only 52.7 million tons, compared with an earlier forecast of 57.2 million tons. In France alone, corn production is expected to plummet to 9.4 million tons, a record low in greater than 20 years, from 13.8 million tons last year.

First-generation biofuel producers are highly dependent on agricultural raw materials: biodiesel uses rapeseed as the main raw material; bioethanol is produced from corn, wheat, and sugar beets. Agricultural production cuts could lead to a tightening of regional raw material supplies, raising production costs and further compressing European biofuel sector-wide profits.

In the European biodiesel market, rapeseed is the benchmark oil feedstock to traditional fatty acid methyl esters (FAME/RME). while the area of rapeseed planting increased during the year, the high temperature and drought during the harvest period depressed the final yield expectations. COCERAL forecast EU plus UK rapeseed production of 21.2 million tonnes, up from an earlier estimate of 21.5 million tonnes. MARS lowered the average EU rapeseed yield to 3.14 tons/hectare, down 2% from the previous estimate.

sector companies said that the regional supply of raw materials such as rapeseed oil and grain ethanol has tightened, and European blending companies might have to increase imports of raw materials or consumption discarded materials raw materials as substitutes. however no matter which option is chosen, higher production costs are a foregone summary.