Market Analyst Worries Over Drop in Oilseed Acres

Analyst says for the first time demand for oilseeds will exceed production.

A Dow Jones interview with Hamburg-based analyst Thomas Meilke notes that demand for 10 major oilseeds on the world market will outstrip production for the first time in three years. Oilseed production in the next year is forecast at 385.79 million metric tons from 388.61 million tons in 2005-2006 - but consumption could rise to 392.3 million tons in 2006-2007 from 380.8 million tons. Meilke is editor of Oil World.

According to the report, that would lead to a marginal decline of 0.7% in output versus an increase of 3% in consumption. This is not expected to be a concern in the near term with oilseed stocks where they are. But Meilke warns there is a sirk that decine in stocks will continue and may accelerate in 2007-2008 if acreage shifts away from oilseeds in favor of other grains.

Meilke's estimates, if they pan out, would drop oilseed supplies by 10% in the next marketing year. He sees a global shift in crop acres from oilseeds to grain.

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