PARIS - The European Union is on course for a rapeseed supply deficit at the end of this season and 2020/21 despite a coronavirus-related slump in biodiesel demand, consultancy Strategie Grains said on Monday as it lowered its forecast for this year's harvest.

In monthly estimates, the consultancy pegged the 2020 rapeseed harvest in the European Union and Britain at 17.02 million tonnes, down from 17.59 million tonned estimated a month ago and 17.85 million tonnes forecast in early March. 

The latest forecast puts the crop at only 0.7% higher than last year's 16.9 million tonnes, which marked a 13-year low.

Plunging demand in rapeseed oil for biofuel was not enough to compensate for a cut in its production forecast and expected lower imports, Strategie Grains said.

"The demand for EU rapeseed oil is expected to gradually recover, starting in the autumn with a rebound in demand for diesel and biodiesel in the transport sector," Strategie Grains wrote.

"That should lead to a decrease in rapeseed oil stocks in the EU, as the EU rapeseed crush (forecast down) is insufficient to cover domestic vegetable oil needs."

The consultancy expects rapeseed prices to rebound slightly once the canola harvest in Canada and Australia is over, but forecasts for high Canadian stocks at the end of June 2021 mean that EU rapeseed prices are not expected to rise much over the winter.

"Unless there is a major adverse weather event affecting oilseed crops in 2020, EU prices will not be able to return to last winter’s levels," it said.

Strategie Grains also expects a rapeseed supply deficit at the end of the current season, helped by attractive crushing margins and high biodiesel requirements in the bloc until February.

However, it expects a fall in the crush in the final quarter of the marketing year, hit by a decrease in availability and the collapse in the demand for vegetable oils in biodiesel, of which there are abundant stocks.

The firm's EU forecasts continue to include Britain, pending negotiation of a new trade relationship after Britain's withdrawal from the bloc.

(Reporting by Sybille de La Hamaide Editing by Gus Trompiz and David Goodman) ((Sybille.deLaHamaide@thomsonreuters.com; +331 4949 5145;))