Highlights

Total European Union oilseeds area in MY 2017/18 is forecast to increase by about 1.5 percent to almost 12 million hectares. The uptick is explained by increasing areas of all three major oilseeds – rapeseed, sunflower and soybeans. The higher acreage, in combination with somewhat higher yields expectations for rapeseed, leads to a forecast of 32.4 MMT for total oilseeds. Except for winterkill effecting rapeseed plantings in some member states, planting and growing conditions for oilseeds have been favorable this year. Total EU-28 oilseeds meal consumption in MY 2017/18 is estimated to increase slightly year-on-year reaching 53.9 MMT. The growing EU poultry sector is driving demand for protein feed.

Production

Total European Union (EU) oilseeds area in MY (marketing year) 2017/18 is forecast to increase by about 1.5 percent to almost 12 million hectares (ha). The uptick is explained by increasing areas of all three major oilseeds– rapeseed, sunflower and soybeans. The higher acreage in combination with somewhat higher yields expectations for rapeseed leads to a forecast of 32.4 million metric tons (MMT) for total oilseeds, an increase of 2.4 percent. Except for winterkill reported in some EU member states (mainly Hungary, Bulgaria and Poland), planting and growing conditions for oilseeds are good but weather conditions in April and May will be crucial for spring plantings and the yields and quality of the rapeseed crop.

The EU is the world’s largest producer of rapeseed and rapeseed products; rapeseed production remains the most important oilseed crop produced in the EU. In MY 2017/18, the forecast for planted area of EU rapeseed is 0.7 percent higher compared to the previous year reaching 6.6 million ha. Romania, Poland, Estonia, Czech Republic, Spain, Germany, Hungary and Lithuania report increased rapeseed acreage for MY 2017/18. These acreage gains are not offset by the drastically reduced plantings in Northern France and minor decreases in the United Kingdom. Following the increase in area and somewhat better yields, per hectare rapeseed production is forecast to increase by almost three percent reaching 21 MMT. Sunflower area is also expected to grow (plus 1.1 percent) from an already high level in the previous MY and may reach 4.22 million ha with a forecasted crop totaling at 8.5 MMT (plus 1.2 percent). High profitability, high demand for crush and trade, and the re-seeding of lost rapeseed area stimulates increasing sunflower plantings. This is especially the case in France, Hungary, Romania, Bulgaria, Italy, Portugal, Germany, and Slovakia.

MY 2017/18 soybean production keeps increasing, but at a relatively low level compared to demand, and at a slower pace than in MY 2016/17. Policy incentives are the primary growth drivers for EU soybean production. Major soybean producing countries within the EU are Italy, France, Romania, Croatia, Austria and Hungary. Rising area is expected in all soybean producing countries except for Croatia. Total soybean area for MY 2017/18 is forecast at 880 thousand ha (plus 8 percent year-on-year) with a total production of 2.5 MMT increasing by 1.4 percent compared to the previous MY. Despite increased production of EU oilseeds, total EU crush is expected to be almost flat at 46.6 MMT in MY 2017/18. Only soybean (and cottonseed but at a very low total volume) crush is forecast to increase.

Consumption and Trade

The EU is highly dependent on imports of oilseeds and oilseeds products (protein meals and vegetable oils) to meet demand for food, feed, and industrial uses, including biofuels production. This is especially true for oilseeds with no or limited domestic production, such as soybeans, soybean products, or palm oil. More than 80 percent of soybeans for crush, over 60 percent of soybean meal, and about 50 percent of sunflower meal must be imported to satisfy the EU demand. Only rapeseed meal production is, on average, equal or somewhat higher than domestic consumption. Total EU oilseeds meal consumption in MY 2017/18 is estimated to be up by 0.2 percent year-on-year reaching 54.5 MMT. The growing EU poultry sector is specifically responsible for driving higher demand for protein feed. Strong world supplies of soybeans and soybean meal are expected to favor the use of soybean products in MY 2017/18 but this may be limited due to high availability and competitiveness of sunflower meal. Due to the demand from the livestock sector, rapeseed meal use is expected to increase by 0.8 percent. Total use of vegetable oils is forecast to decrease by about 0.4 percent to 25.5 MMT which is mainly due to decreased biofuels use. Biofuels production is the second largest use of vegetable oils after food use in the EU. Since more and more vegetable oils are being replaced by waste fats and oils, the use of vegetable oils for biofuels production is declining. This is particularly the case for palm oil. Most EU biodiesel production uses rapeseed oil as the main feedstock.

Policy

On November 30, 2016, the EC released the proposal on the Renewable Energy Directive post 2020 (RED II) as part of the comprehensive “Clean Energy for All Europeans” package which included eight legislative proposals. The RED II for the period 2021-2030 seeks to ensure the European Union (EU) meets its binding target to produce at least 27 percent of its energy from renewable sources by 2030. The revised RED sets a cap on food crop-based biofuels starting at 7 percent in 2021 and going down gradually to 3.8 percent in 2030. The RED strengthens the existing EU sustainability criteria including Greenhouse Gas (GHG) savings for biofuels and their extension to forest biomass, solid biomass, biogas as well as efficiency criteria for large-scale biomass and electricity plants. The RED post-2020 proposal follows the ordinary legislative procedure (co-decision) and must be adopted by both the Council and the European Parliament. A possible outcome is foreseen in the second half of 2018.

Introduction

Commodity: Total Oilseeds

Commodity: Total Oilseeds

Marketing Year

MY 2015/16

MY 2016/17

MY 2017/18

Area

USDA Official

Post New

USDA Official

Post New

USDA Official

Post New

11,849

11,846

11,779

11,781

0

11,957

Beginning Stocks

3,586

3,586

3,839

3,605

0

2,845

Production

32,541

32,446

31,277

31,66

0

32,404

Extra EU28 imports

20,021

20,025

18,895

19,755

0

19,695

TOTAL SUPPLY

56,148

56,057

54,011

55,02

0

54,944

Extra EU28 exports

984

1,016

970

1,143

0

1,11

Crush

46,892

46,923

46,092

46,597

0

46,652

Food Use

1,51

1,559

1,53

1,53

0

1,547

Feed, Seed, Waste

2,923

2,954

2,903

2,905

0

2,925

TOTAL DOMESTIC USE

51,325

51,436

50,525

51,032

0

51,124

Ending Stocks

3,839

3,605

2,516

2,845

0

2,71

TOTAL DISTRIBUTION

56,148

56,057

54,011

55,02

0

54,944

MY 2017/18

Total EU-28 oilseeds area in MY 2017/18 is forecast to increase by about 1.5 percent compared to the previous year and is expected to reach almost 12 million ha. The increase is explained by increasing acreage of all three major oilseeds - rapeseed, sunflower, and soybeans.

MY 2016/17

In MY 2016/17, total EU-28 oilseeds area is down by 0.6 percent, mainly due to a lower soybean area which is partially offset by increased rapeseed area.

EU-28 Total Oilseeds Production

MY 2017/18

Expectations for total EU-28 oilseeds production in MY 2017/18 are for a 2.4 percent increase to 32.4 MMT. This is partially the result of somewhat higher yields and acreage in rapeseed crop.

MY 2016/17

Total oilseeds production in the EU-28 decreased by 2.4 percent year-on-year. Lower rapeseed production compared to the previous year’s bumper crop could not be offset by increased sunflower and soybean production.

EU-28 Total Oilseeds Crush

MY 2017/18

Despite higher production, total EU-28 oilseeds crush is expected to be almost flat at 46.6 MMT. This is a result of increased soybean crush, flat rapeseed crush, and decreased – but still relatively high– sunflower crush.

MY 2016/17

Mainly due to lower rapeseed crush, total EU-28 oilseeds crush is estimated to decrease by 0.7 percent year-on-year totaling at 46.6 MMT.

Total Meals

MY 2015/16

MY 2016/17

MY 2017/18

USDA Official

Post New

USDA Official

Post New

USDA Official

Post New

Crush

46,602

46,715

45,832

46,382

0

46,432

Beginning Stocks

1,056

1,056

712

958

0

926

Production

30,147

30,175

29,609

29,92

0

29,995

Extra EU28 imports

25,401

25,401

26,804

25,499

0

25,504

TOTAL SUPPLY

56,604

56,632

57,125

56,377

0

56,425

Extra EU28 exports

1,17

1,169

1,1

1,08

0

1,08

Industrial

510

570

510

570

0

570

Food Use

32

32

Feed, Seed, Waste

54,18

53,903

54,628

53,769

0

53,879

TOTAL DOMESTIC USE

54,722

54,505

55,17

54,371

0

54,481

Ending Stocks

712

958

855

926

0

864

TOTAL DISTRIBUTION

56,604

56,632

57,125

56,377

0

56,425

MY 2017/18

In line with the almost flat crush in MY 2017/18, EU-28 total oilseeds meal production is expected to remain stable at 30 MMT. Increased feed use of rapeseed and soybean meal is expected to make up for lower feed use of sunflower meal. Total feed use of oilseeds meals is forecast to only increase slightly to 53.9 MMT.

MY 2016/17

Low availability of rapeseed meal but high supplies of sunflower meal leads to increased use of sunflower meal in feed rations.

Commodity: Total Oils

Commodity:Total Oils

Marketing Year

MY 2015\2016

MY 2016/17

MY 2017/18

USDA Official

Post New

USDA Official

Post New

USDA Official

Post New

Beginning Stocks

1,85

1,85

1,805

1,919

0

1,568

Production

18,378

18,378

17,939

17,812

0

18,147

Extra EU28 imports

9,918

9,907

9,775

9,9

0

9,76

TOTAL SUPPLY

30,146

30,135

29,519

29,631

0

29,475

Extra EU28 exports

2,472

2,391

2,343

2,423

0

2,383

Industrial

12,28

3,044

12,08

3,043

0

3,04

Biofuels

0

9,35

0

9,165

0

9,005

Food Use

13,252

13,094

13,462

13,089

0

13,039

Feed, Seed, Waste

332

332

332

339

0

339

TOTAL DOMESTIC USE

25,864

25,82

25,874

25,636

0

25,423

Ending Stocks

1,805

1,919

1,297

1,568

0

1,665

TOTAL DISTRIBUTION

30,146

30,135

29,519

29,631

0

29,475


MY 2017/18

After a decline in the previous marketing year, EU-28 total oilseeds oil production is expected to grow by 1.9 percent to 18.1 MMT. With near stable food use but slightly decreasing biofuels use, total oilseeds oil consumption is expected to decline somewhat to 25.4 MMT.

Oilseed, Soybean

2015/2016

2016/2017

2017/2018

Market Year Begin

Oct 2015

Oct 2016

Oct 2017

European Union

USDA

New

USDA

New

USDA

New

Official

Post

Official

Post

Official

Post

Area Harvested

849

870

892

815

0

880

Beginning Stocks

682

682

1120

1,044

0

1,009

Production

2,256

2,33

2,385

2,43

0

2,465

MY Imports

15,006

15,006

13,8

14,4

0

14,6

Total Supply

17,944

18,018

17,305

17,874

0

18,074

MY Exports

144

144

150

150

0

150

Crush

15,1

15,2

14,7

15,1

0

15,2

Food Use Dom.Cons.

180

230

190

235

0

237

Feed Waste Dom.Cons.

1,4

1,4

1,4

1,38

0

1,4

Total Dom. Cons.

16,68

16,83

16,29

16,715

0

16,837

Ending Stocks

1,12

1,044

865

1,009

0

1,087

Total Distribution

17,944

18,018

17,305

17,874

0

18,074


The EU remains the world’s second largest importer of soybeans after China. In MY 2015/16, Brazil and the United States represented more than 75 percent of total EU imports. Imports from the United States were on an increasing trend between MY 2011/12 and MY 2015/16.

The increase in EU soybean production is due to incentive policies under the Common Agricultural Policy (CAP). Still, production remains limited relative to imports. Both domestic and imported soybeans are crushed to produce meal, which is used for feed in the livestock and poultry sectors. Crush is driven by meal demand, which depends on the relative prices and availability of substitutes (such as sunflower meal and feed wheat) and on the growth rate of the livestock and poultry sectors.

MY 2017/18

In MY 2017/18, EU soybean production is expected to increase but at a slower pace than in MY 2016/17. The area harvested is expected to increase by 65 thousand hectares. It is expected that harvested area will increase in all member states except Croatia. The increase of harvested area is mainly driven by CAP’s ecological focus areas and coupled payments. Italy, France, and Romania remain the three largest producers, accounting for more than 70 percent of total EU production.

In MY 2017/18, the quantity of soybeans available for export on the world market is expected to be slightly higher than in MY 2016/17. EU imports of soybeans are expected to increase compared to MY 2016/17 but to remain below the high level of MY 2015/16. Crush could return to the level of MY 2015/16 after a slight decline in MY 2016/17.

MY 2016/17

In MY 2016/17, the soybean area harvested is expected to decrease compared to MY 2015/16. However, production is expected to go up due to better yields. The area decreases in all the soybean producing member states except France and Romania as these two countries provide coupled payments for soybeans under the EU’s CAP. Domestic production remains low compared to imports – which are expected to decrease after the very high levels of MY 2015/16 – but still account for more than 80 percent of total supply. The rise in production is not expected to offset the decline in imports, resulting in a decrease in total supply. Crush is expected to remain below the high level of MY 2015/16 and margins are expected to be lower in several countries including Spain and Italy.

On the basis of FAS Posts’ estimates, MY 2016/17 feed use has been revised slightly down compared to previous USDA official numbers.

MY 2015/16

Based on FAS Posts’ estimates, MY 2015/16 crush was revised up compared to previous USDA official numbers. In MY 2015/16, EU soybean crush and imports reached a very high level. Crush rose sharply in the Netherlands, Italy, and Romania. In the Netherlands, crushers switched from rapeseed to soybeans because of the lower rapeseed crop and lower demand for rapeseed oil. Moreover, the supply of meal from Argentina has been unreliable for a few years; it was replaced with imports of soybeans from the United States and Brazil that are crushed in the Netherlands. In Romania, competitive imports of soybeans replaced part of the meal imports, which declined.

Meal, Soybean

2015/2016

2016\2017

2017\2018

Market Year Begin

Oct 2015

Oct 2016

Oct 2017

European Union

USDA

New

USDA

New

USDA

New

Official

Post

Official

Post

Official

Post

Crush

15,1

15,2

14,7

15,1

0

15,2

Extr. Rate

0.79

0.78

0.79

0.78

0

0.78

Beginning Stocks

683

683

374

474

0

482

Production

11,929

11,929

11,613

11,8

0

11,9

MY Imports

19,206

19,206

20,25

19,35

0

19,3

Total Supply

31,818

31,818

32,237

31,624

0

31,682

MY Exports

302

302

300

300

0

300

Industrial Dom.

10

10

10

10

0

10

Food Use Dom.

32

32

32

32

0

32

Feed Waste Dom.

31,1

31

31,5

30,8

0

30,85

Total Dom. Cons.

31,142

31,042

31,542

30,842

0

30,892

Ending Stocks

374

474

395

482

0

490

Total Distribution

31,818

31,818

32,237

31,624

0

31,682


The EU remains the world’s largest soybean meal importer. More than 80 percent of total imports are from Argentina and Brazil. Imports account for more than 60 percent of the EU’s consumption of soybean meal. Crush of locally-produced soybeans is increasing due to CAP incentive policies but it still accounts for a limited share of total EU market. Meal is used for feed in the livestock and poultry sectors. The main users of soybean meal are also the countries which produce the most meat and dairy products

MY 2017/18

In MY 2017/18, soybean meal production is expected to go up but to remain below the very high level of MY 2015/16. Imports are expected to decrease slightly. The availability and competitiveness of sunflower meal is expected to remain high. That could limit the growth in feed use of soybean meal, which is nevertheless expected to increase.

MY 2016/17

Soybean meal imports declined between October 2016 and February 2017 compared to the same period in the previous year. This drop was due to the competitiveness of sunflower meal and extensive use of feed wheat in several countries including France and Spain. However, imports are expected to go up during the second part of the marketing year following a recovery in export supplies in South America. As a result, total MY 2016/17 imports are expected to be slightly higher than in MY 2015/16. This small rise is not expected to offset lower domestic production and feed use of soybean meal should remain below the level of MY 2015/16.

Compared to previous USDA estimates, soybean meal production has been revised up as a result of higher estimated crush whereas imports and feed use have been revised down.

MY 2015/16

Feed use has been revised down compared to previous USDA estimates based on FAS Posts’ figures.


Market Year Begin

Oct 2015

Oct 2016

Oct 2017

European Union

USDA

New

USDA

New

USDA

New

Official

Post

Official

Post

Official

Post

Crush

15,1

15,2

14,7

15,1

0

15,2

Extr. Rate

0.19

0.19

0.19

0.19

0

0.19

Beginning Stocks

239

239

348

313

0

263

Production

2,869

2,869

2,793

2,83

0

2,87

MY Imports

325

325

250

250

0

250

MY Imp. from U.S.

0

0

0

0

0

0

Total Supply

3,433

3,433

3,391

3,393

0

3,383

MY Exports

915

915

950

900

0

890

Industrial Dom.

1

850

1

870

0

875

Food Use Dom.

1,12

1,3

1,12

1,3

0

1,3

Feed Waste Dom.

50

55

50

60

0

60

Total Dom. Cons.

2,17

2,205

2,17

2,23

0

2,235

Ending Stocks

348

313

271

263

0

258

Total Distribution

3,433

3,433

3,391

3,393

0

3,383


In the EU, soybean oil is mainly used for food, biofuels, and other industrial uses such as cosmetics or paint.

The excess supply of soybean oil is exported to third countries, mainly in Africa. Since MY 2011/12, the EU has been a net exporter of soybean oil with exports ranging from 750 to 1,000 thousand MT and imports ranging from 250 to 390 thousand MT per year.

MY 2016/17 and 2017/18

In MY 2016/17, the production of soybean oil is expected to decrease in the EU as a consequence of the lower crush. It is expected to increase in MY 2017/18 with a higher crush. Biofuel use of soybean oil is expected to increase in MY 2016/17 and 2017/18 due to an increase in Spain driven by an anticipated recovery in biodiesel production.

MY 2015/16

In MY 2015/16, food use of soybean oil increased compared to MY 2014/15 in several member states including Italy, Poland, and Belgium but most of the year-on-year increase is due to a rise in consumption in Germany.

Food and feed use have been revised up compared to previous USDA estimates based on more current FAS Posts’ data.

Rapeseed

The EU is the world’s largest producer of rapeseed and products. The two largest producers in the EU are Germany and France, followed by the U.K., Poland, Romania, and the Czech Republic. Rapeseed meal is used exclusively in the livestock sector. Rapeseed meal competes with U.S. soybeans and soybean meal in feed ratios. The main driver for the rapeseed oil demand is the biodiesel industry, but food and industrial use of rapeseed oil are also influencing demand.

Oilseed, Rapeseed

Oilseed, Rapeseed

2015/2016

Market Year Begin

Jul 2015

2016/2017

2017/2018

European Union

Official USDA

New Post

Official USDA

New Post

Official USDA

New Post

Area Planted

6,58

6,58

6,5

6,6

0

6,585

Area Harvested

6,513

6,51

6,45

6,54

0

6,585

Beginning Stocks

1,879

1879

2004

1829

0

1,079

Production

22,195

22

20,1

20,4

0

21

MY Imports

3,494

3,494

3,7

3,8

0

3,7

MY Imp. from U.S.

0

0

0

0

0

0

Total Supply

27,568

27,373

25,804

26,029

0

25,779

MY Exports

344

344

400

400

0

350

Crush

24,32

24,3

23,5

23,7

0

23,7

Food Use Dom.Cons

0

0

0

0

0

0

Feed Waste Dom.Cons

900

900

900

850

0

850

Total Dom. Cons.

25,22

25,2

24,4

24,55

0

24,55

Ending Stocks

2,004

1,829

1,004

1,079

0

879

Total Distribution

27,568

27,373

25,804

26,029

0

25,779


The EU’s demand for rapeseed exceeds its domestic supply which leads to the import of large quantities of rapeseed for crushing. The EU is mainly dependent on imports from Ukraine and Australia, which together account for roughly 90 percent of EU rapeseed imports. Currently, the world market for rapeseed is tight and Ukrainian supplies are limited due to a poor harvest. A bumper crop in Australia may replace Ukrainian production to a certain extent. Crushers also started to look to Canada as the only other major rapeseed exporter in the market. Imports from Canada have increased but availability is also limited since Canadian origin needs to be certified sustainable and is mostly genetically modified rapeseed. Canada uses the International Sustainability and Carbon Certification (ISCC) system which meets the EU’s criteria in the Renewable Energy Directive.

EU farmers planted more rapeseed in autumn 2016, especially in Romania, Bulgaria and Poland where farmers expanded their area due to good profitability. In Romania, sowing conditions were good and the Agricultural Ministry again renewed the authorization for neonicotinoids utilization in rapeseed production. There were also minor gains for rapeseed acreage in Estonia, Czech Republic, Spain, Germany, Hungary, and Lithuania. Spanish farmers have now tripled rapeseed acreage in the past five years. In total, gains more than offset drastically reduced plantings in Northern France due to a lack of rain and minor decreases in the United Kingdom. But in spring 2017, the outlook for harvested acreage in the European Union is only expected to increase slightly due to winterkill mainly in Hungary, Bulgaria, and Poland.

So far, growing conditions for rapeseed have been mostly favorable in the United Kingdom and Croatia while many major rapeseed producing regions faced problems during the winter. In general, yield is expected to be slightly better than last year but far from the record levels of 2014. Weather conditions in April and May will determine the final quality and yield of the EU rapeseed crop. Total EU-28 rapeseed production is currently forecast at 21.10 MMT in MY 2017/18, which is 3 percent higher than the production estimate for 2016/17.

Though there is slightly higher availability of domestic rapeseed, the EU market for rapeseed will remain tight while there is an abundant supply of soybeans and bearish prices on the world market. Beginning stocks of rapeseed in the EU are extremely low and imports are expected to decrease slightly. It is estimated that there will be a rebound for rapeseed production in the Ukraine, which will again replace some Australian production on the import side. Rapeseed crush in the EU is expected to be stable due to steady meal demand by the EU feed industry and higher use of rapeseed oil in the biodiesel industry. The steady crush expectations are also fueled by the launch of a new oilseed crushing facility in the Czech Republic. At the end of the MY, stocks of rapeseed are expected to deteriorate further.

MY 2016/17

EU rapeseed production is expected to reach 20.4 MMT in MY 2016/17, down over 7 percent from the previous MY. This is the lowest European rapeseed crop since MY 2012/13. EU rapeseed production was revised downwards since harvests in the United Kingdom, Denmark, Poland, France, and Germany were much lower than expected while supplies from Hungary, Romania, and Spain were higher. In some major producing countries, the average yield decreased to levels below average. Total EU acreage increased slightly.

The limited supply of domestically produced rapeseed led to a tight EU market while exports from Ukraine are reduced. In the first half of MY 2016/17, overall imports have decreased slightly. But, Australia’s bumper crop will lead to a steep increase in imports from down under. Canada has also emerged as an important supplier. Overall, this is expected to result in higher imports in this MY.

Though there is slightly higher availability of domestic rapeseed, the EU market for rapeseed will remain tight while there is an abundant supply of soybeans and bearish prices on the world market. Beginning stocks of rapeseed in the EU are extremely low and imports are expected to decrease slightly. It is estimated that there will be a rebound for rapeseed production in the Ukraine, which will again replace some Australian production on the import side. Rapeseed crush in the EU is expected to be stable due to steady meal demand by the EU feed industry and higher use of rapeseed oil in the biodiesel industry. The steady crush expectations are also fueled by the launch of a new oilseed crushing facility in the Czech Republic. At the end of the MY, stocks of rapeseed are expected to deteriorate further.

MY 2016/17

EU rapeseed production is expected to reach 20.4 MMT in MY 2016/17, down over 7 percent from the previous MY. This is the lowest European rapeseed crop since MY 2012/13. EU rapeseed production was revised downwards since harvests in the United Kingdom, Denmark, Poland, France, and Germany were much lower than expected while supplies from Hungary, Romania, and Spain were higher. In some major producing countries, the average yield decreased to levels below average. Total EU acreage increased slightly.

The limited supply of domestically produced rapeseed led to a tight EU market while exports from Ukraine are reduced. In the first half of MY 2016/17, overall imports have decreased slightly. But, Australia’s bumper crop will lead to a steep increase in imports from down under. Canada has also emerged as an important supplier. Overall, this is expected to result in higher imports in this MY.

Rapeseed crush is expected to drop by a bit over 2 percent to 23.7 MMT in the current MY. Higher imports of rapeseed nearly offset lower production in the European Union. Rapeseed crush is also fueled by high beginning stocks of rapeseed which are expected to be over 40 percent lower at the end of the marketing year.

MY 2015/16

In 2015/16 EU farmers harvested the second best rapeseed crop in the past decade. Data shows at EU production of 22.00 MMT for rapeseed. The production is down nearly 2.6 MMT from the record crop the previous marketing year which was based on high acreage and exceptional yields. Ending stocks were stable due to high imports from Australia, Ukraine, and Canada.

Rapeseed Meal

Rapeseed meal production follows crush in MY 2017/18 and stays stable. Due to a rebound in rapeseed meal imports from Ukraine, rapeseed meal use in feed use is expected to increase slightly with the EU dairy sector being the decisive factor on the demand side. It is expected that rapeseed meal will partially replace sunflower meal and grains in feed ratios. The popularity of rapeseed meal for animal feed varies among EU countries. Its use is most prevalent in countries that have a long rapeseed crushing history and high dairy production like Germany, France, the Benelux, and the UK. Availability of rapeseed meal in the coming year stays tight so stocks are projected to decline further.

Meal, Rapeseed

2015/2016

2016/2017

2017/2018

Market Year Begin

Jul 2015

Jul 2016

Jul 2017

European Union

USDA

New

USDA

New

USDA

New

Official

Post

Official

Post

Official

Post

Crush

24,32

24,3

23,5

23,7

0

23,7

Extr. Rate

0.57

0.57

0.57

0.57

0

0.57

Beginning Stocks

220

220

172

310

0

280

Production

13,862

13,85

13,395

13,52

0

13,52

MY Imports

409

409

300

250

0

350

MY Imp. from U.S.

0

0

0

0

0

0

Total Supply

14,491

14,479

13,867

14,08

0

14,15

MY Exports

469

469

400

400

0

400

Industrial Dom.Cons.

0

0

0

0

0

0

Food Use Dom.Cons.

0

0

0

0

0

0

Feed Waste Dom.Cons.

13,85

13,7

13,2

13,4

0

13,5

Total Dom. Cons.

13,85

13,7

13,2

13,4

0

13,5

Ending Stocks

172

310

267

280

0

250

Total Distribution

14,491

14,479

13,867

14,08

0

14,15

Rapeseed Oil

Biofuel production is still the major driver of the EU rapeseed oil market. Changes in EU biofuels policy lead to decreasing use of rapeseed oil for biodiesel in MY 2016/17 with stable use in MY 2017/18. There is strong competition with animal fats and recycled oils as well as crude oil prices negatively affecting profitability of producing rapeseed oil. Rapeseed oil production follows crush and total output is expected to be stable in MY 2017/18. Despite marketing campaigns in some countries promoting rapeseed oil for food use, with lower availability consumption is expected to decrease slightly in MY 2016/17 but stabilize in the following MY. Imports, exports, and ending stocks are forecast to be relatively stable.

Oil, Rapeseed

2015/2016

2016/2017

2017/2018

Market Year Begin

Jul 2015

Jul 2016

Jul 2017

European Union

USDA

New

USDA

New

USDA

New

Official

Post

Official

Post

Official

Post

Crush

24,32

24,3

23,5

23,7

0

23,7

Extr. Rate

0.418

0.418

0.418

0.417

0

0.417

Beginning Stocks

452

452

370

507

0

517

Production

10,166

10,157

9,823

9,88

0

9,88

MY Imports

198

198

200

180

0

200

MY Imp. from U.S.

2

2

0

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

10,816

10,807

10,393

10,567

0

10,597

MY Exports

346

350

300

350

0

350

MY Exp. to EU

0

0

0

0

0

0

Industrial Dom. Cons.

7,2

7,2

6,9

7,05

0

7,05

Food Use Dom. Cons.

2,85

2,7

2,95

2,6

0

2,6

Feed Waste Dom.Cons.

50

50

50

50

0

50

Total Dom. Cons.

10,1

9,95

9,9

9,7

0

9,7

Ending Stocks

370

507

193

517

0

547

Total Distribution

10,816

10,807

10,393

10,567

0

10,597


MY2017/18

Following a very good sunflower crop in the current season, the prospects for MY2017/18 in the EU are strong for further production growth with both increased acreage and strong yields anticipated. Due to good profitability and higher crush/trade demand, most countries will increase planted areas (France, Hungary, Romania, Bulgaria, Italy, Portugal, Germany, and Slovakia). Areas under specialty sunflower are reported to grow in France and Bulgaria due to price premiums. (In France, high oleic sunflower accounts for around 60 percent of planted area.) In Romania and Bulgaria, the increase in sunflower area is also due to re-seeding of lost rapeseed area. In Portugal, poor corn margins along with water limitations and existing contracts between crushers and growers may lead to increased sunflower plantings in MY2017/18. Conversely, in Spain, sunflower area will likely decline due to lower profit margins compared to alternative crops (olive, almond and pistachio orchards in the South and rapeseeds and sugar beet in the North) and lower water reserves. In total, EU sunflower area is projected to grow by 1.1 percent.

Provided that the weather cooperates, the EU is forecast to produce 8.5 MMT or 1.2 percent more sunflower seeds compared to MY2016/17. Favorable planting conditions are reported in most member states. Countries which enjoyed record yields in the current season (Hungary, Italy, and Slovakia) expect a decline in yields while those affected by summer heat and dryness (France, Romania, Bulgaria, Spain) project a recovery in average yields.

A higher domestic crop is forecast to lead to lower sunflower seed imports, especially if the Black Sea supplies are more limited. As a result, crush is projected to decline slightly (less than one percent) from current high levels but remain strong due to expected attractive demand for sunflower meal and oil. Crush margins are likely to improve compared to their current levels. Romania, Bulgaria, Spain, and Germany forecast a recovery in crush next season. However, EU crushers may face tighter competition between sunflower seeds and likely higher rapeseeds crop in the new season.

The increase in EU sunflower seeds production is projected to result in a small growth in exports, which along with strong crush and stable food/feed/waste use, is expected to reduce ending stocks by one to two percent.

MY2016/17

The latest EU data confirms slightly lower than previously estimated crop due to summer heat and drought in some Southern member states (Romania, Bulgaria, Spain, and France) while Hungary had an exceptional harvest. Production growth in most member states compensated the decline in Spain, Portugal, and Greece. In some countries, the adverse weather affected quality by reducing the oil content and/or shrinking the seeds' size. Average yields still exceeded those in the previous season and EU production is estimated to grow by 9.1 percent.

Multiple factors stimulated a sharp increase in imports including, a lower than anticipated crop, quality issues, sharply reduced world prices, abundant and price competitive Black Sea supply, and favorable EU crush demand. The average import price in the first quarter of the marketing year was at USD $688/MT compared to USD $1,020/MT a year before (source: World Trade Atlas), or 33 percent lower. As of mid-March, the EU-28 imports skyrocketed by 165 percent with Romania, France, The Netherlands, Bulgaria, Portugal, Spain, and Hungary leading demand. The major origins to date were Moldova with 35 percent share, followed by Argentina (18 percent) and Ukraine (15 percent). However, current projection is that imports growth will stagnate due to accumulated stocks in the EU-28. On the other hand, some member-states such as Romania and Bulgaria may see higher exports of sunflower seeds due to depressed crush margins. For this reason, the current EU export estimate is above USDA official.

Crush demand in the EU significantly exceeded FAS-Post expectations and is now estimated 5.2 percent more than in the previous season, although still slightly under USDA official estimates. Strong crush estimates are supported by abundant domestic supplies, price competitive imports, rapeseeds deficits, and strong sunflower meal and oil demand (for feed and food uses). Leading crush countries are France, Hungary, Italy, Romania, Germany, and Austria.

Crush margins varied considerably by member states. Spain and Portugal reported lower/negative margins this season. Industry groups in Romania and Bulgaria have indicated that tough regional competition in the Black Sea and the export tax on seeds in Ukraine has depressed the crush margins. Overall, the sunflower crush margins in the middle of the current season have declined compared to the beginning of the marketing year but remained on par or more attractive than that for rapeseeds crush.

Due to low or negative crush margins in some member states (Romania, Bulgaria, Spain, and Portugal), the crushing industry in these countries will likely reduce crush in the second half of the marketing year on the expense of increased exports. Thus the EU export estimate was revised higher. Major export destinations are Pakistan, South Africa, and Turkey. EU-28 ending stocks are estimated to increase by 4.6 percent as more of these stocks are anticipated in Eastern part of the EU.

MY 2015/16

Sunflower ComplexSunflower Seeds

Oilseed,

2015/2016

2016/2017

2017/2018

Market Year Begin

Oct 2015

Oct 2016

Oct 2017

European Union

USDA

New

USDA

New

USDA

New

Official

Post

Official

Post

Official

Post

Area Harvested

4,178

4,173

4,2

4,165

0

4,21

Beginning Stocks

949

949

654

645

0

675

Production

7,679

7,7

8,4

8,4

0

8,5

MY Imports

622

622

500

700

0

530

MY Imp. from U.S.

40

0

40

0

0

0

Total Supply

9,25

9,271

9,554

9,745

0

9,705

MY Exports

426

426

350

480

0

500

Crush

7,15

7,18

7,6

7,55

0

7,5

Food Use Dom. Cons.

540

540

540

540

0

540

Feed Waste Dom.

480

480

480

500

0

500

Total Dom. Cons.

8,17

8,2

8,62

8,59

0

8,54

Ending Stocks

654

645

584

675

0

665

Total Distribution

9,25

9,271

9,554

9,745

0

9,705


Also, a newly patented product SunPro (sunflower meal with 46 percent protein content, to be produced in Hungary) will be available on the market in larger volumes, over 100,000 MT. To date, the product has been produced only in Bulgaria in more limited quantities, however, it has enjoyed an increasing demand by EU poultry and aquiculture industries as a price competitive alternative of soybean meal. Industry reports indicate growing demand for this product and possible production increase up to 300,000 MT in the near term. Reportedly, output of higher protein sunflower meal by the EU crushers will continue to grow as well along with imports of lower protein/ higher oil content imports of sunflower meal from the Black Sea suppliers (Ukraine).

MY2016/17

In the current season, the EU is estimated to produce 5.1 percent more sunflower meal due to higher crush. Member states reported also growth in production of higher protein sunflower meal.

Demand is favorable and imports have increased to supplement local production for animal feed. As of mid-March, EU imports were 7 percent higher compared to a year ago with France, Italy, The Netherlands, Poland and Spain leading import demand. The estimate for the annual imports is to grow by 15 percent compared to the previous year. Major origins are Ukraine with almost 70 percent market share, Russia (16 percent) and Argentina (12 percent) as of mid-March.

Sunflower meal is very price competitive and in high availability, encouraging a higher incorporation in animal feed. In the first quarter of the marketing year, average import price of sunflower meal was at USD $211.6/MT compared to USD $238.2/MT during the same period a year ago, or 11 percent lower. In addition, prices have declined since the start of the season. Sunflower meal was more price competitive then both soybean meal and rapeseed. In addition, sunflower meal from Ukraine is seen as both a good protein and energy source due to high(er) oil content. In the second half of the current season, sunflower meal attractiveness may weaken due to anticipated competition from Latin American exports of soybean meal and Argentine exports of sunflower exports.

In addition to price attractiveness and availability, sunflower meal consumption was also supported by growing feed consumption in the EU and by use of more meals vs grains in feed. As a result, EU-28 use of sunflower meal is projected to reach record levels at 7.65 MMT or 750,000 MT more than in the previous season, although still below USDA official estimate. Steady or growing use is reported in all member states (with the exception of the UK and Slovenia) led by France, Germany, Hungary, and Denmark.

Exports of sunflower meal are estimated flat to traditional markets (Turkey and Morocco). Ending stocks may accumulate due to higher supply.

Oil, Sunflowerseed

Meal, Sunflowerseed

2015/2016

2016/2017

2017/2018

Market Year Begin

Oct 2015

Oct 2016

Oct 2017

European Union

USDA

New

USDA

New

USDA

New

Official

Post

Official

Post

Official

Post

Crush

7,15

7,18

7,6

7,55

0

7,5

Extr. Rate

0.5429

0.5432

0.543

0.543

0

0.5427

Beginning Stocks

153

153

166

174

0

164

Production

3,882

3,9

4,127

4,1

0

4,07

MY Imports

3,296

3,296

3,85

3,8

0

3,75

MY Imp. from U.S.

0

0

0

0

0

0

Total Supply

7,331

7,349

8,143

8,074

0

7,984

MY Exports

215

215

200

200

0

200

Industrial Dom. Cons.

0

60

0

60

0

60

Food Use Dom. Cons.

0

0

0

0

0

0

Feed Waste Dom. Cons.

6,95

6,9

7,75

7,65

0

7,6

Total Dom. Cons.

6,95

6,96

7,75

7,71

0

7,66

Ending Stocks

166

174

193

164

0

124

Total Distribution

7,331

7,349

8,143

8,074

0

7,984


MY2017/18

Sunflower oil supply is forecast to remain at higher levels than achieved in the current season due to high, stable crush. Most member states expect steady or growing production (Spain, Romania, Bulgaria, and Germany) while France and Austria anticipate a dip in sunflower oil output. Good availability is likely to result in 7 percent lower imports compared to the current season.


Oil, Sunflowerseed

2015/2016

2016/2017

2017/2018

Market Year Begin

Oct 2015

Oct 2016

Oct 2017

European Union

USDA

New

USDA

New

USDA

New

Official

Post

Official

Post

Official

Post

Crush

7,15

7,18

7,6

7,55

0

7,5

Extr. Rate

0.4225

0.4206

0.4225

0.4225

0

0.4227

Beginning Stocks

352

352

231

360

0

343

Production

3,021

3,02

3,211

3,19

0

3,17

MY Imports

1,392

1,392

1,4

1,45

0

1,35

MY Imp. from U.S.

0

0

0

0

0

0

Total Supply

4,765

4,764

4,842

5

0

4,863

MY Exports

374

374

350

450

0

380

Industrial Dom. Cons.

200

420

180

395

0

400

Food Use Dom. Cons.

3,95

3,6

4,1

3,8

0

3,75

Feed Waste Dom.Cons.

10

10

10

12

0

12

Total Dom. Cons.

4,16

4,03

4,29

4,207

0

4,162

Ending Stocks

231

360

202

343

0

321

Total Distribution

4,765

4,764

4,842

5

0

4,863

Consumption is projected to remain strong although expected better supply of domestic olive and rapeseed oil as well as higher world supply of soybean and palm oil may result in weakened price competitiveness and in a marginal reduction in use. Higher food use is forecast for Germany, Romania, Hungary, France, and Bulgaria. However, higher olive oil output in Spain and Portugal may lead to decreased sunflower oil consumption. Sunflower oil remains a preferred healthy choice (no trans-fats) of food vegetable oil for direct consumption. Changing consumer patters have resulted in higher use of sunflower seed oil in the food industry.

Strong domestic demand is estimated to keep the sunflower oil in the EU; exports would decline. EU exporters would likely face tight competition with Black Sea exporters, mainly Ukraine. Ending stocks are currently expected to decline by 5.5 percent.

MY2016/17

Sunflower oil output is estimated to rebound by 5.6 percent due to higher crush supported by imports. As of mid-March, imports have increased by 10 percent, with almost 90 percent of these imports supplied by Ukraine. Leading importers in the EU are Spain, Italy, The Netherlands, France, and the United Kingdom. Imports are expected to increase by 4.2 percent in MY2016/17 to meet favorable food use demand.

Food consumption of sunflower seed oil is estimated to grow by 5.5 percent or by 200,000 MT driven by the shortage of olive and rapeseed oils in the EU, along with price competitiveness of sunflower oil. Most member states with the exception of Germany and the United Kingdom have reported steady or higher sunflower food consumption. Small growth in population and sharp growth in tourists in Southern European countries have also contributed to the favorable demand. Prices of sunflower oil have been very attractive, declining from early in the season.

Following a growth of 46 percent in exports in the first quarter of the marketing year, annual exports are projected to slow in the second half of the year due to tight regional and world competition. Exports are still expected to exceed MY2015/16 levels. Favorable domestic demand may slow exports in the second half of the season. Still some countries in Eastern Europe are likely to accumulate ending stocks due to challenging exports suppressed by Black Sea competitors.

MY2015/16

Adjustments were made to biofuel use of sunflower oil due to new data from Italy. The same set of data is kept for the two following marketing years. Food use in MY2015/16 was revised to reflect this change.

Palm Kernel Complex


Meal, Palm Kernel

2015/2016

2016/2017

2017/2018

Market Year Begin

Jan 2016

Jan 2017

Jan 2018

European Union

USDA

New

USDA

New

USDA

New

Official

Post

Official

Post

Official

Post

Crush

0

0

0

0

0

0

Extr. Rate

0

0

0

0

0

0

Beginning Stocks

0

0

0

0

0

0

Production

0

0

0

0

0

0

MY Imports

2,192

2,192

2,1

2,1

0

2,1

MY Imp. from U.S.

0

0

0

0

0

0

Total Supply

2,192

2,192

2,1

2,1

0

2,1

MY Exports

1

0

0

0

0

0

Industrial Dom.Cons.

500

500

500

500

0

500

Food Use Dom.Cons.

0

0

0

0

0

0

Feed Waste Dom.Cons.

1,691

1,692

1,6

1,6

0

1,6

Total Dom. Cons.

2,191

2,192

2,1

2,1

0

2,1

Ending Stocks

0

0

0

0

0

0

Total Distribution

2,192

2,192

2,1

2,1

0

2,1

Palm Kernel Oil


Palm Kernel Oil

Oil, Palm Kernel

2015/2016

2016/2017

2017/2018

Market Year Begin

Jan 2016

Jan 2017

Jan 2018

European Union

USDA

New

USDA

New

USDA

New

Official

Post

Official

Post

Official

Post

Crush

0

0

0

0

0

0

Extr. Rate

0

0

0

0

0

0

Beginning Stocks

111

111

127

138

0

122

Production

0

0

0

0

0

0

MY Imports

693

694

600

650

0

650

MY Imp. from U.S.

0

0

0

0

0

0

Total Supply

804

805

727

788

0

772

MY Exports

5

5

5

4

0

4

Industrial Dom. Cons.

250

250

230

250

0

250

Food Use Dom.Cons.

410

400

420

400

0

400

Feed Waste Dom.Cons.

12

12

12

12

0

12

Total Dom. Cons.

672

662

662

662

0

662

Ending Stocks

127

138

60

122

0

106

Total Distribution

804

805

727

788

0

772


Despite lower global production of palm kernel meal in 2016, EU imports and use declined only slightly. Furthermore, the official reported EU import figure could be revised upwards, as is historic practice. Lower use in Asia and New Zealand made palm kernel meal a competitive product on the EU market. In 2017 and 2018, EU palm kernel meal use for feed is expected to decline as a result of shrinking dairy cattle herds in the main markets. About half of the palm kernel meal is used in the Benelux countries. During the past five years, palm kernel meal use in cattle feed has been about twenty-five percent in the Benelux countries. Germany, the UK, and Ireland also use palm kernel meal in livestock feed.

Palm Oil

Oil, Palm


Oil, Palm

2015/2016

2016/2017

2017/2018

Market Year Begin

Jan 2016

Jan 2017

Jan 2018

European Union

USDA

New

USDA

New

USDA

New

Official

Post

Official

Post

Official

Post

Area Planted

0

0

0

0

0

0

Area Harvested

0

0

0

0

0

0

Trees

0

0

0

0

0

0

Beginning Stocks

527

527

413

263

0

173

Production

0

0

0

0

0

0

MY Imports

6,634

6,634

6,65

6,75

0

6,7

MY Imp. from U.S.

0

0

0

0

0

0

Total Supply

7,161

7,161

7,063

7,013

0

6,873

MY Exports

148

148

80

150

0

150

Industrial Dom.Cons.

3,4

3,45

3,55

3,42

0

3,25

Food Use Dom.Cons.

3

3,1

2,9

3,07

0

3,05

Feed Waste Dom.Cons.

200

200

200

200

0

200

Total Dom. Cons.

6,6

6,75

6,65

6,69

0

6,5

Ending Stocks

413

263

333

173

0

223

Total Distribution

7,161

7,161

7,063

7,013

0

6,873


During 2016, palm oil imports declined by about 300,000 MT compared with 2015. The reduction of imports is equally divided between the main two suppliers, Indonesia and Malaysia. Lower palm oil imports are reported for the Netherlands and Italy, while increased imports are reported for Spain. The lower global availability and higher prices of palm oil are expected to have had only a marginal effect on the EU palm oil consumption in 2016. Lower use of palm oil last year and the next two years is mainly related to replacement by waste fats and oils in the biofuels sector, and by other vegetable oils in the food sector.

EU palm oil use for industrial purposes, including for generation of power and heat, and production of biofuels, is estimated at about 3.45 MMT in 2016. For 2016, the use of palm oil for biofuel production is estimated at 2.05 million metric tons. The use for biofuel production is expected to decline to about 2.02 and 1.85 MMT in 2017 and 2018, respectively. This significant cut of use for fuel purposes is based on the anticipation that the Dutch and Italian biofuel sector is replacing palm oil with waste oils and fats. In contrast, the Spanish biofuel sector increased its use of palm oil and is anticipated to continue to source palm oil as the main oil for biofuel production during this and next year. The higher iodine number permitted in Spain allows for an intensive use of soybean and palm oil in biodiesel production for domestic consumption. Palm oil makes up a large share of the raw materials used in domestically produced biodiesel in Spain. Because of the opening of a new biofuel plant, palm oil use is also expected to increase in France in 2018.

If palm oil is used for biofuels production it must be certified as sustainable as established in the Renewable Energy Directive (RED). The European Commission approved the Roundtable on Sustainable Palm Oil (RSPO) program as compliant with the RED as from December 14, 2012, for a period of five years. Sustainability certification is also an important factor for acceptance in the food market. Due to favorable prices, unique physical characteristics, and non GM content, the replacement of palm oil in food preparations is expected to be limited. However, negative NGO campaigns about the environmental impact of palm oil production potentially hinder the further penetration in the food sector. Based on environmental considerations, the French Parliament proposed to impose an additional tax for food grade palm oil of 90 euro per metric ton from 2017. In June 2016, however, the Parliament dropped this plan after the French Government proposed to put forward an alternative proposal that would include more vegetable oils used in food.

Private sectors in the Netherlands, Belgium, the UK, Germany, Italy, France, Denmark, and Sweden agreed to ensure a fully sustainable palm oil supply in Europe by 2020. On December 7, 2015, the governments of the Netherlands, UK, Germany, France, and Denmark declared governmental support for this initiative by presenting the Amsterdam Palm Oil Declaration. On June 14, 2016, the Norwegian government also endorsed this Declaration. Market figures are not public, but reportedly the sales of certified palm oil by the food sectors are close to reaching those goals set by participating EU member states. In 2015, the import of RSPO certified palm oil is estimated at 2.0 million metric tons, over thirty percent of the total. In 2016, the production of RSPO certified palm oil declined from 12.9 to 12.2 million metric tons, about 17 percent of the annual global production, as two large producers were suspended from the RSPO program.

Peanut Complex

Oilseed, Peanut

2015/2016

2016/2017

2017/2018

Market Year Begin

May 2015

Oct 2016

Oct 2017

European Union

USDA

New

USDA

New

USDA

New

Official

Post

Official

Post

Official

Post

Area Planted

0

0

0

0

0

0

Area Harvested

0

0

0

0

0

0

Beginning Stocks

18

18

20

20

0

20

Production

0

0

0

0

0

0

MY Imports

859

868

865

820

0

835

MY Imp. from U.S.

135

140

145

120

0

100

Total Supply Cons.

877

886

885

840

0

855

MY Exports

32

39

30

30

0

30

Crush

32

35

32

32

0

32

Food Use Dom.Cons.

790

789

800

755

0

770

Feed Waste Dom.Cons.

3

3

3

3

0

3

Total Dom. Cons.Cons.

825

827

835

790

0

805

Ending Stocks

20

20

20

20

0

20

Total Distribution

877

886

885

840

0

855


The EU is the largest importer of peanut and peanut products in the world. Imports of ready-shelled peanuts have increased by over ten percent in the last decade. In-shell peanut imports into the EU have declined by almost forty percent in the same time period. The latter now comprises only 8 percent of total tonnage. China and the U.S. lead exports of in-shell to the EU, while Argentina dominates the shelled peanut trade. Argentina typically has 50-60 percent market share of the shelled peanut supply, and these are ultimately directed to the EU confectionery market. In general, U.S. shelled peanut trade with the EU is price-driven but trade is also dependent on the ease with which U.S. suppliers can meet EU requirements for pesticide residues, aflatoxin levels, phytosanitary certificates and private industry standards. After years of consolidation, the EU peanut kernel market is dominated by very few large multi-national processors.

Meal, Peanut

2015/2016

2016/2017

2017/2018

Market Year Begin

May 2015

Oct 2016

May 2017

European Union

USDA

New

USDA

New

USDA

New

Official

Post

Official

Post

Official

Post

Crush

32

35

32

32

0

32

Extr. Rate

0.44

0.46

0.44

0.47

0

0.47

Beginning Stocks

0

0

0

0

0

0

Production

14

16

14

15

0

15

MY Imports

1

1

1

1

0

1

MY Imp. from U.S.

0

0

0

0

0

0

Total Supply

15

17

15

16

0

16

MY Exports

0

0

0

0

0

0

Industrial Dom. Cons.

0

0

0

0

0

0

Food Use Dom.Cons.

0

0

0

0

0

0

Feed Waste Dom.Cons.

15

17

15

16

0

16

Total Dom. Cons.

15

17

15

16

0

16

Ending Stocks

0

0

0

0

0

0

Total Distribution

15

17

15

16

0

16


Peanuts for confectionery and other further processed product uses remains the focal point for trade. Peanut crushing within the EU has not increased in recent times. The main supplier of peanut meal to the EU has historically been Senegal. Exports from West Africa are erratic and intrinsically linked to political levers, as well as extreme weather events. Despite a 1 million ton harvest in Senegal MY2015/16 little to no peanuts were crushed in-country (owing to better export prices from China and Vietnam). The United States supplied the single ton of peanut meal that was imported into the EU in MY2015/16

Peanut Oil


Oil, Peanut

2015/2016

2016/2017

2017/2018

Market Year Begin

May 2015

Oct 2016

May 2017

European Union

USDA

New

USDA

New

USDA

New

Official

Post

Official

Post

Official

Post

Crush

32

35

32

32

0

32

Extr. Rate

0.375

0.3429

0.375

0.375

0

0.375

Beginning Stocks

3

3

3

3

0

3

Production

12

12

12

12

0

12

MY Imports

65

65

65

60

0

60

MY Imp. from U.S.

0

0

0

0

0

0

Total Supply

80

80

80

75

0

75

MY Exports

5

3

5

3

0

3

Industrial Dom.

0

0

0

0

0

0

Food Use Dom.

72

74

72

69

0

69

Feed Waste Dom.

0

0

0

0

0

0

Total Dom. Cons.

72

74

72

69

0

69

Ending Stocks

3

3

3

3

0

3

Total Distribution

80

80

80

75

0

75


Although it undergoes further refinement after crushing, peanut oil must be labeled on EU food packaging as an allergen. This deters its widespread use in food applications. EU peanut oil consumption has declined in the last ten years, and is increasingly substituted by other oils (such as sunflower oil). Brazil is typically the leading supplier; other suppliers include Argentina, Senegal and Nicaragua.

Fish Meal

Meal, Fish

2015/2016

2016/2017

2017/2018

Market Year Begin

Jan 2016

Jan 2017

Jan 2018

European Union

USDA

New

USDA

New

USDA

New

Official

Post

Official

Post

Official

Post

Catch For Reduction

1620

0

1620

0

0

0

Extr. Rate, 999.9999

0.28

0

0.28

0

0

0

Beginning Stocks

0

0

0

0

0

0

Production

460

480

460

485

0

490

MY Imports

284

284

300

295

0

300

MY Imp. from U.S.

0

9

0

9

0

9

Total Supply

744

764

760

780

0

790

MY Exports

183

183

200

180

0

180

Industrial Dom. Cons.

0

0

0

0

0

0

Food Use Dom.Cons.

0

0

0

0

0

0

Feed Waste Dom.Cons.

561

581

560

600

0

610

Total Dom. Cons.

561

581

560

600

0

610

Ending Stocks

0

0

0

0

0

0

Total Distribution

744

764

760

780

0

790


The EU is dependent on fishmeal imports to fulfill domestic demand. In 2016, imports and use increased very slightly due to higher exportable supplies in South America. In 2017, this trend is expected to continue. Germany and Denmark are the biggest markets for fishmeal in the EU. Together these countries account for about 85 percent of total EU imports. Denmark is the main fishmeal producer in the EU, with an annual production generally fluctuating between 150,000 – 200,000 MT.

Copra Meal

Copra is not produced and no longer processed in the EU-28. The EU-28 satisfies all its copra meal and coconut oil demand with imports.

Meal, Copra

2015/2016

2016/2017

2017/2018

Market Year Begin

Jan 2016

Jan 2017

Jan 2018

European Union

USDA

New

USDA

New

USDA

New

Official

Post

Official

Post

Official

Post

Crush

0

0

0

0

0

0

Extr. Rate, 999.9999

0

0

0

0

0

0

Beginning Stocks

0

0

0

0

0

0

Production

0

0

0

0

0

0

MY Imports

13

13

3

3

0

3

MY Imp. from U.S.

0

0

0

0

0

0

Total Supply

13

13

3

3

0

3

MY Exports

0

0

0

0

0

0

Industrial Dom. Cons.

0

0

0

0

0

0

Food Use Dom.Cons.

0

0

0

0

0

0

Feed Waste Dom.Cons.

13

13

3

3

0

3

Total Dom. Cons.

13

13

3

3

0

3

Ending Stocks

0

0

0

0

0

0

Total Distribution

13

13

3

3

0

3


Imports of copra meal have increased to 13,000 MT in 2016 due to price and availability. Volumes were traded to Italy with sources were mainly from Ghana and Vietnam. Imports of copra meal are expected to drop to normal levels of 3,000 MT in 2017 and 2018.

Coconut Oil

Oil, Coconut

2015/2016

2016/2017

2017/2018

Market Year Begin

Jan 2016

Jan 2017

Jan 2018

European Union

USDA

New

USDA

New

USDA

New

Official

Post

Official

Post

Official

Post

Crush

0

0

0

0

0

0

Extr. Rate, 999.9999

0

0

0

0

0

0

Beginning Stocks

53

53

32

43

0

35

Production

0

0

0

0

0

0

MY Imports

511

511

510

510

0

510

MY Imp. from U.S.

0

0

0

0

0

0

Total Supply

564

564

542

553

0

545

MY Exports

12

12

8

10

0

10

Industrial Dom. Cons.

210

204

200

203

0

200

Food Use Dom.Cons.

300

300

300

300

0

300

Feed Waste Dom.Cons.

10

5

10

5

0

5

Total Dom. Cons.

520

509

510

508

0

505

Ending Stocks

32

43

24

35

0

30

Total Distribution

564

564

542

553

0

545

In 2016 EU imports of coconut oil have stabilized at 511,000 MT. Also, the outlook for 2017 and 2018 is currently stable but that depends on price and availability. Production in the Philippines, the main supplier, has not yet recovered.

Cottonseed

Oilseed, Cottonseed

2015/2016

2016/2017

2017/2018

Market Year Begin

Oct 2015

Oct 2016

Oct 2017

European Union

USDA

New

USDA

New

USDA

New

Official

Post

Official

Post

Official

Post

Area Harvested

310

293

263

261

0

282

Beginning Stocks

56

56

40

65

0

60

Production

412

416

392

430

0

439

MY Imports

40

35

30

35

0

30

MY Imp. from U.S.

0

0

0

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

508

507

462

530

0

529

MY Exports

38

63

40

83

0

80

MY Exp. to EU

0

0

0

0

0

0

Crush

290

208

260

215

0

220

Food Use Dom. Cons.

0

0

0

0

0

0

Feed Waste Dom.Cons.

140

171

120

172

0

172

Total Dom. Cons.

430

379

380

387

0

392

Ending Stocks

40

65

42

60

0

57

Total Distribution

508

507

462

530

0

529

Production

The EU-28 is a minor producer of cotton. EU-28 cotton production has declined by more than 50 percent following CAP reforms effective in 2006 that decoupled payments and reduced support and market barriers for a number of crops, including cotton. The EU-28 does not permit farmers to cultivate modern biotech cotton varieties, further hurting competitiveness. Only two EU-28 Members States, Greece and Spain grow significant amounts of cotton commercially. Cotton is a major agricultural crop in Greece, accounting for more than 8 percent of total agricultural output. More than 50,000 farmers grow cotton, producing about 80 percent of the EU crop. Thessaly, Macedonia, Thrace and Mainland Greece are the major cotton-producing areas. Cotton is planted from March 1 to April 15; the crop life cycle is usually 170 to 210 days, depending on the variety and weather conditions. The harvest occurs from October 1 to November 30 and most of the cotton is machine harvested. Spain's cotton area is concentrated in the region of Andalusia, and it is progressively concentrating in the provinces of Seville and Cadiz. Cotton is grown on some of the best agricultural land, competing with other irrigated crops. Greece’s MY 2017/18 cottonseed production is forecast to increase 3 percent comparing to the previous year. Spain’s MY 2016/17 is forecast to be similar to the previous MY. Yields in both Greece and Spain are expected to be average.

Olive Oil

Oil, Olive

2015/2016

2016/2017

2017/2018

Market Year Begin

Nov 2015

Nov 2016

Nov 2017

European Union

USDA

New

USDA

New

USDA

New

Official

Post

Official

Post

Official

Post

Area Planted

0

0

0

0

0

0

Area Harvested

0

0

0

0

0

0

Trees

6,75

0

6,75

0

0

0

Beginning Stocks

113

113

281

292

0

112

Production

2,31

2,32

2,1

1,9

0

2,215

MY Imports

100

88

100

50

0

90

MY Imp. from U.S.

0

0

0

0

0

0

MY Imp. from EU

0

182

0

224

0

240

Total Supply

2,523

2,521

2,481

2,242

0

2,417

MY Exports

672

589

650

560

0

600

MY Exp. to EU

0

0

0

0

0

0

Industrial Dom.Cons.

20

20

20

20

0

20

Food Use Dom.Cons.

1,55

1,62

1,6

1,55

0

1,62

Feed Waste Dom.Cons.

0

0

0

0

0

0

Total Dom. Cons.

1,57

1,64

1,62

1,57

0

1,64

Ending Stocks

281

292

211

112

0

177

Total Distribution

2,523

2,521

2,481

2,242

0

2,417

MY 2017/18

Estimates indicate that olive oil production levels in the EU-28 for MY2017/18 should be higher than those in MY2016/17, based in anticipated improved Spanish yields. Portugal production levels should also rebound following a poor fruit bearing year in MY2016/17. In addition, the area dedicated to olives tress in Spain and Portugal continues to expand. In Italy and Greece, production is anticipated to return to average levels in MY2017/18 after a terrible year MY2016/17. Spring blooming conditions and precipitation after a rather dry fall and winter will determine the size of the MY2017/18 crop.

On the phytosanitary side, Xylella fastidiosa represents a growing threat for olive oil producing countries, which are putting in place contingency plans to limit the expansion of the outbreaks of this bacterium. Xylella fastidiosa can devastate fruit tree plantations, including olive groves. So far, available phytosanitary solutions to prevent the spread of the bacteria include destroying affected plant material, increasing border control, and banning the movement of plant material from the affected regions. Outbreaks so far have been declared in olive plantations in the Italian province of Lecce and Spain’s Balearic Islands.

Assuming a return to average production levels in the EU and neighboring countries, consumption and export opportunities for European olive oil may grow accordingly, and still allow for a tepid stock re-build.

MY 2016/17

Production

Olive oil production in the EU is concentrated in the Mediterranean countries. Spain followed by Italy, Greece, and Portugal are the main olive oil producers in the European Union. Olive oil production also exists in other European countries such as Cyprus, France, Croatia, and Slovenia.

Blooming conditions in Spain and Portugal were favorable. However, excessive rains during the fruit setting stage negatively affected the fruit bearing numbers. This, along with the natural alternative fruit bearing of olive trees, especially in non-irrigated conditions, has resulted reduction of olives intended for oil production. The dry conditions delayed the harvesting season and were detrimental for oil yields. According to industry estimates, this season Spain’s olive oil production may reach 1,265 TMT.

Italy’s olive oil production is forecast at 243 TMT, which represents a 49 percent drop compared to the previous abundant campaign due to sudden alternations of hot, cold, and rainy weather that affected the Italian peninsula throughout the year, combined with the olive fruit fly attack in September.

MY 2016/17 olive oil production in Greece is forecast at 185 TMT, a 42 percent drop compared to the previous campaign. Adverse weather conditions, in Crete in particular, along with a significant incidence of olive fly are identified as the main drivers for the production drop.

Portugal’s production is projected at 70 TMT down from the 107 TMT historical record olive oil production in MY 2015/16. Despite Portuguese olive groves restructuration and continuous investments in irrigation, alternative fruit bearing still has a significant impact in Portugal’s olive oil output.

Consumption and Trade

The EU is a net exporter of olive oil, with exports largely exceeding imports. However, imports of olive oil from other non-EU producers in the Mediterranean Basin help to make up for olive oil shortfalls at the Member State levels. With the limited availability of olive oil in traditional suppliers such as Tunisia, Morocco or Turkey, extra EU imports are anticipated to be limited.

Consequently, in MY2016/17 a poor EU crop and limited supply from main trading partners in the Mediterranean basin may slow down the increase of exports and price tension may cause a downward revision of domestic consumption and substitution by other oils. Interestingly, consumption is rather stable in non-producing EU member states, whereas in producing member states we will likely see consumers turn to other oils.

Stocks

The combination of the lower olive oil production obtained in MY 2016/17 and the still significant amount of exports will result in short carry-out of olive oil, similar to the low levels with which MY 2015/16 begun.

Policy

The European Commission can provide private storage aid (PSA) if there are serious disturbances to the olive oil market in a certain region or if the average price for one or more of the following products is recorded on the market during a two weeks period:

• €1,779/ton for extra virgin olive oil

•€1,710/ton for virgin olive oil

•€ 1,524/ton for pomace olive oil

Regulation (EC) 1918/2006 as amended by Regulation (EC) 605/2016 open a two-year additional of tariff quota for olive oil originating in Tunisia. In particular, the EC will grant Tunisia with an annual quota of 35,000 MT olive oil duty free to the EU until the end of 2017, in addition to the 56,700 MT referred to in the Association Agreement between the two parties.

The Common Agriculture Policy

The CAP entered into force in January 2014, with the exception of the new direct payments structure, including “green” payments, and additional support for young farmers, which applied from 2015. One significant change is the “greening component” in Pillar 1, where the European Commission (EC) provides that there should be three elements of greening that all farmers would have to comply with to receive full direct payments. These three components are:

  • Crop Diversification - Farmers must produce at least three different crops, each one accounting for a
  • maximum of 70 percent and a minimum of five percent of each farm.

  • Conservation of permanent grassland – With environmentally sensitive grassland, farmers may not
  • convert permanent grassland into another crop. The EU defines permanent grassland as grass that has been there for five years. For permanent grassland in general, farmers can convert but have to reconvert where the ratio of permanent grassland to agricultural land decreases too much in a region or Member State (MS).

  • Ecological focus areas (EFA) – Farmers must reserve at least five percent of arable area for ecological
  • use, i.e. field margins, hedges, trees, fallow land, landscape features, biotopes, buffer strips, afforested area. Subject to a Commission report, this area may increase to seven percent after 2017. One option for EFAs is to have nitrogen-fixing crops, e.g. protein crops. It is up to each MS to decide whether to use this option or not. On February, 15, 2017, the EC presented a delegated act to ban the use of pesticides on productive or potentially productive EFAs. The European Parliament and Council have a two-month scrutiny period, which they can extend for a further two months.

    Aid System for Oilseeds

    Farmers do not receive specific payment for growing oilseeds. The impact of the elimination of production-linked subsidies on the EU oilseeds market is marginal compared to the impact of the growing biofuels market.

    The high demand for rapeseed for the production of biofuels due to the introduction of the Renewable Energy Directive (RED) in 2009 led to increased prices which were enough of an incentive for farmers to increase rapeseed production over the last few years. With the exception of the olive sector, there is no intervention buying, export subsidy or other market support programs available for oilseeds in the EU. The Commission can provide private storage aid (PSA) if there are serious disturbances to the olive oil market in a certain region or the average price for one or more of the following products is recorded on the market during a two weeks period: EU-28 Oilseeds and Products Annual 2017

    • €1,779/ton for extra virgin olive oil

    •€1,710/ton for virgin olive oil

    •€ 1,524/ton for lampante olive oil

    Protein Deficiency

    EU protein crop production provides only about 30 percent of the protein consumed as animal feed in the EU. The remaining 70 percent of the protein crops are imported, mainly as soy proteins. Imports are estimated to represent the equivalent of 20 million hectares cultivated outside the EU, or more than 10 percent of EU arable land. EU import tariffs for the main protein crops are set at zero. Only around three percent of EU arable land is currently cultivated with protein crops. However, there are some initiatives to increase the production of protein crops.

    Member States (MS) may grant a greater proportion (generally 8 percent but up to 13 percent in some MS, or above 13 percent subject to EC approval) of their direct payment envelopes in the form of voluntary coupled support (VCS) to farmers in sectors or regions which face particular difficulties and where farming activity is important for economic, environmental and/or social reasons. This aid should be granted only to the extent necessary to maintain current levels of production in the region concerned. Additionally, there is an option for aid of up of up to 2 percent of the national ceiling available for MS which decide to use at least 2 percent of the direct payments envelope to support production of protein crops. Should any MS decide to use this possibility, the Commission has to be notified in advance. MS must notify the EC by August 2014 to benefit from this option from January 1, 2015. In 2014 16 MS have notified the Commission of their decision to grant coupled support for the production of protein crops. Based upon their decision, about 1 % of the annual amount available for granting direct support in EU-28, i.e. 10.6% of the amounts earmarked to VCS, will be available for the production of protein crops from 2015.

    Blair House Agreement

    The 1992 Blair House Memorandum of Understanding on Oilseeds (or Blair House Agreement (BHA)) between the United States and the EU was included in the EU WTO schedule of commitments and resolved a GATT dispute over EU domestic support programs that impaired U.S. access to the EU oilseeds market. The BHA limited the EU oilseed planting area of mainly rapeseed, sunflower seed, and soybeans, for food and feed purposes to an adjusted maximum guaranteed area (MGA) for those producers benefiting from crop specific oilseed payments. This resulted in a reduction of the EU oilseed production area and penalized production in excess of the maximum. The BHA also limited the production of oilseeds not intended for human or animal consumption planted on setaside land (“non-food” set-aside). Output of these oilseeds was limited to 1 MMT of byproducts expressed in soybean meal equivalent annually. As the set-aside arrangements are no longer applicable in the CAP, the “nonfood” set-aside scheme is similarly not applicable.

    The BHA is triggered by crop specific payments. With the elimination of the crop specific payments, the BHA is maintained as a mechanism but is not used. However, if the introduction of VCS on oilseeds were to trigger the BHA, the Commission asserts that measures are in place to ensure that the MGA is not overshot.

    Sustainability

    As in the United States, the interest for sustainability, sustainable production, and environmental issues are growing among EU consumers, industry and policymakers, impacting policy in several areas. The theme of sustainability is well established in the EU marketplace and major food retailers in EU are increasingly using it as a competitive tool. It is a formal part of retailer business and marketing plans and it is being reinforced by significant investment throughout the production chain, including the growing use of private certification bodies. Within the EC, DG Agriculture and DG Environment are focusing on resource issues such as carbon, water, and biodiversity. Sustainable production is defined as an agricultural sector which is able to maintain viable production throughout the territory of the EU, and which at the same time contributes to the EU’s key environmental goals, including the protection of natural and cultural resources and the achievement of successful climate change mitigation and adaptation.

    EU Climate and Energy Package

    The EU Energy and Climate Change Package was adopted by the European Council on April 6, 2009. The Renewable Energy Directive (RED), which is part of this package, entered into force on June 25, 2009, and ha to be transposed into national legislation in the Member States (MS) by December 5, 2010. MS were also required to submit National Renewable Energy Action Plans (NREAP) by June 30, 2010. The adoption and requirement for the implementation of the Directive did not give enough time for either the MS or the Commission to prepare for the implementation.

    The EU Energy and Climate Change Package include the “20/20/20” goals for 2020:

    • A 20 percent reduction in greenhouse gas (GHG) emissions compared to 1990.

    • A 20 percent improvement in energy efficiency compared to forecasts for 2020.

    • A 20 percent share for renewable energy in the EU total energy mix. Part of this 20 percent share is a 10 percent minimum target for renewable energy consumed in transport to be achieved by all MS. The goal for 20 percent renewable energy in total energy consumption is an overall EU goal. The RED then set different targets for different MS within this overall target, based on each MS’ capacity. Therefore, some MS will have to reach much higher targets than the 20 percent, whereas other MS will have much lower targets In contrast to the 20 percent overall EU target, the 10 percent target for renewable energy in transport is obligatory for all MS.

    The Fuel Quality Directive (FQD) complements the RED and mirrors some of the RED’s content such as the sustainability criteria. A key requirement of the FQD is that all fuel suppliers (oil companies) must meet a 6 percent cut in GHG emissions by 2020 across all fuel categories supplied to the market. In addition, the FQD limits ethanol blends to 10 percent or less when ethanol is used as an oxygenate. This creates a blend wall in some MS that potentially risks future growth in ethanol consumption. Fuel specifications for biodiesel place limits on the palm oil and soy oil content of biodiesel.

    Revision of the RED and FQD

    Directive 2015/1513, covering indirect land use change (ILUC), entered into force on October 5, 2015, and amends both the RED and the Fuel Quality Directive (FQD). The ILUC Directive includes the following key elements:

    • Fuel suppliers are required to include ILUC emissions in their reports;

    • A seven percent cap (energy basis) to the contribution of food crop based biofuels to the 10 percent target for renewable energy in transport by 2020, leaving three percent to be covered by non-food crop based biofuels. MS are free to set lower caps;

    • Double counting of the energy contribution of advanced biofuels towards the 10 percent blending target for 2020.

    Commission Communication on 2030 Climate and Energy Goals

    In January 2014, the EC published its Communication along with a Proposal revising the EU Emission Trading System (ETS). The Communication, which sets out the 2030 framework, includes a reduction in greenhouse gas (GHG) emissions by 40 percent compared to the 1990 level, an EU-wide binding target for renewable energy of at least 27 percent, and renewed ambitions for energy efficiency. The Communication also states that biofuels produced from food based feedstocks will not receive ‘public support’ after 2020. On October 24, 2014, European Heads of State and Government confirmed the EC’s proposal by reaching an agreement on the 2030 Framework for Climate and Energy in an effort to maintain what the EU sees as its global leadership on the climate change issue.

    RED post 2020

    On November 30, 2016, the EC released the proposal on the Renewable Energy Directive post 2020 (RED II) as part of the comprehensive “Clean Energy for All Europeans” package which included eight legislative proposals.

    The RED II for the period 2021-2030 seeks to ensure the European Union (EU) meets its binding target to produce at least 27 percent of its energy from renewable sources by 2030. The revised RED sets a cap on food crop-based biofuels starting at 7 percent in 2021 and going down gradually to 3.8 percent in 2030, strengthens the existing EU sustainability criteria including Greenhouse Gas (GHG) savings for biofuels and their extension to forest biomass, solid biomass, biogas as well as efficiency criteria for large-scale biomass and electricity plants. The RED post 2020 proposal follows the ordinary legislative procedure (co-decision) and must be adopted by both the Council and the European Parliament. A possible outcome is foreseen in the second half of 2018.

    Biotech

    Asynchronous Rate of Approvals on Soybeans

    The EU livestock industry relies on imports of genetically engineered (GE) feed with soy products being the single largest agriculture import into the European Union (EU). However, the EU’s slow approval of GE events restrictsU.S. exports. The delay in approvals creates risks for the trade.

    The EU announced a “technical solution” in 2011 in an attempt to minimize trade disruptions due to LLP of unapproved GE events in feed imports. The Regulation, Commission Regulation (EU) No 619/2011 which entered into force on July 20, 2011, permits the inadvertent presence in feed shipments of up to 0.1 percent of a GE product unapproved in the EU, if the product is approved in the country of export and it has been three months since EFSA concluded its completeness check.

    In effect with this “technical solution”, the EU chose not to introduce a commercially-viable policy to address the issue of LLP, but to maintain its zero tolerance position. Although the adoption of the “technical solution” demonstrates that the EC is aware of the problems caused by asynchronous approvals, the fact that the measure is limited to 0.1 percent renders it commercially unviable.

    Pesticides

    The use of three neonicotinoids (clothianidin, imidacloprid and thiametoxam) has been restricted since December 1, 2013 for a period of two years on crops attractive to honeybees such as rapeseed, sunflowers, and soybeans (by Commission Implementing Regulation (EU) No 485/2013).

    Review of the EU’s comitology rules

    On February 14, 2017, the European Commission published a legislative proposal to amend the EU’s comitology rules (Regulation EU 182/2011) in a stated effort to make Member States (MS) more accountable for EU legislation. These proposed changes in the decision-making rules would apply to all areas of EU law-making.

    However, to date, only approval decisions for genetically engineered (GE) products and glyphosate, the active ingredient in a widely used plant protection product, have failed to reach a qualified majority for or against. In these cases, the EC has been obliged to take the final decision. The proposal follows the ordinary legislative procedure (co-decision) and must be adopted by both the Council and the European Parliament.