Global Supply, Demand and Price Outlook of Oilseeds, Oils and Meals

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1 Global Supply, Demand and Price Outlook of Oilseeds, Oils and Meals Presentation at Globoilin New Delhi on 2 Febr 218 Thomas Mielke, ISTA Mielke, Oil World, Global Market Research on Oilseeds, Oils and Meals Feel free to contact me for assistance at <thomas.mielke@oilworld.de> Company Profil and Services ISTA Mielke GmbH publisher of OIL WORLD - was founded in 1958 ISTA = International STatistical Agricultural Information Leading private authority for global research and market analyses for oilseeds, oils & fats and oilmeals Independent, not involved in trading, unbiased information Providing monthly and quarterly world supply and demand balances Daily, weekly and monthly reports on oilseeds, oils and oilmeals. Also a Chinese Report in Mandarin. Take a free 3-week trial at Source: ISTA Mielke GmbH, Oil World 1

2 The Indian dilemma: Widening domestic supply gap. Can higher veg oil import taxes really help? Short term--longterm Veg oil Imports 17/18: Total 15.6 (vs 15.4) Palm oil 9.55 vs Soyaoil 3.37 vs Sunfloil 2.2 vs INDIA: Oilseed Crops and Imports of Oils (Mn T) 1/2 3/4 Imports of Oils Crops 7/8 11/12 15/16 5/6 9/1 13/14 17/18F ,4 3,2 3 2,8 2,6 2,4 2,2 2 1,8 1,6 1,4 1,2 1 Yields of Soybeans, Rapeseed & Sunfl.seed in Key Countries in Tonnes per Ha Rapssaat Sojabohnen Sonnensaat 94/95 97/98 /1 3/4 6/7 9/1 13/14 17/18F YieldIncreasesin thepast15 years: Soybeans +18% Rapeseed +26% Sunflowerseed +53% (a) Berechnet mit 3-Jahres-Durchschnitten. Source: ISTA Mielke GmbH, Oil World 2

3 Prices ofpalmoilunder pressure in Dec, falling to US $ 618 (Dec22). Very strong demand has kept prices well above thoseof215. World PO exports 49.6 Mn T (+5.6). Price recoveredslightlyin Jan 218, whichwas not unexpected. Monthly Prices Crude Palm Oil, fob Indonesia (US-$/T) Monthly averages until January / / / Oct Nov Dec Jan Feb Mar Apr May Jun Jly Aug Sep Monthly Prices Crude Palm Oil, fob Indonesia (US-$/T) Monthly averages until January / / / Oct Nov Dec Jan Feb Mar Apr May Jun Jly Aug Sep Supply& Demand of17 oils& fats: Currentvegoilsuppliesarelarge. World stocksup2 Mn fromlast year. Production of vegetable oils and animalfatsincreasedby15. Mn T from a year agoin Jan/Dec217. The global situation changed from deficitin 216 tosurplusin 217. Part ofthesurpluswas usedto replenish stocks. J a n / D e c 17 Oils/Fats: Production 22.9 (+15.) 25.9 Consumption 219. (+7.3) Surplus/Deficit +1.9 Mn T -5.8 Source: ISTA Mielke GmbH, Oil World 3

4 Looking on Palm Oil alone: World palmoiloutputjumpedby8.6 Mn T fromlast yearin Jan/Dec217. Also the PO situation changed from deficitin 216 tosurplusin 217. But pricesdidnot plummet. Part of the surplus was needed to replenish depleted stocks. J a n / D e c Palm Oil (Mn T ) Production 67.8 (+8.6) 59.2 Consumption 65.4 (+2.6) 62.8 Supply& Demand of17 oils& fats: Currentvegoilsuppliesarelarge. World stocksup2 Mn fromlast year. Production of vegetable oils and animalfatsincreasedby15. Mn T from a year agoin Jan/Dec217. The global situation changed from deficitin 216 tosurplusin 217. J a n / D e c 17 Oils/Fats: Production 22.9 (+15.) 25.9 Consumption 219. (+7.3) Surplus/Deficit +1.9 Mn T -5.8 Surplus/Deficit +2.4 Mn T -3.6 What is the Price Outlook? The global production prospects O c t / S e p t Production of 17/18 16/ oils& fats Of which: Palm oil Lauric oils Soya oil Rape/canola oil Sunflower oil Grd+cotton oils Other oils/fats Source: ISTA Mielke GmbH, Oil World 4

5 The Outlook for Palm Oil Manychallenges: - Lack of replanting(age profile) - Labour shortage(malaysia) - Below potential yields -Acreagelimitations(slowdown in new plantings) The strong recovery in world palm oil production in 217 and 218 istemporary. From219 onward there will be smaller annual increases in palm oil production and supplies. 216: -6% = -3.8 Mn T 1998: -5% = -.8 MnT Palm Oil Production in Major Countries (Mn T) Malaysia Effects of El Nino Indonesia Rest of World Source: ISTA Mielke GmbH, Oil World 5

6 PALM OIL : World Production ( Mn T ) and Yields ( T/ha ) P r o d u c t i o n Y i e l d s 218F F Indonesia 38.7* 36.8* 32.4* 33.53* 3.86* 3.81* 3.54* 3.89* Malaysia 2.7* * 3.93* 3.51* 4.18* Thailand 2.3* 2.46* * 3.1* 2.34* 2.76* America 4.81* 4.75* * 3.3* Africa 2.64* 2.55* * 1.68* Oth ctrs. 1.38* 1.31* * 2.38* WORLD 7.53* 67.79* * 3.56* Mn T +8.6 Mn T Bullish or bearish? My expectation is that world palm oil supplies will be comfortably large in Jan/Sep 218: J a n / Sept Palm Oil (Mn T ) Opening stocks Production PALM OIL : World Production ( Mn T ) a P r o d u c t i o n 218F Indonesia 38.7* 36.8* 32.4* 33.53* Malaysia 2.7* Thailand 2.3* 2.46* America 4.81* 4.75* Africa 2.64* 2.55* Oth ctrs. 1.38* 1.31* WORLD 7.53* 67.79* World Supplies Mn T +8.6 Mn T Source: ISTA Mielke GmbH, Oil World 6

7 Palm oil stocks likely to increaseby2.5 Mn T from April tosept 218 PALM OIL : World Supply & Demand ( Mn T ) Apr / Sept Oct / March 218F /18F 16/17 Opening stocks 1.33* Production * * Indonesia * 18.72* 15.78* 18.21* 17.91* Malaysia * * 8.73 Imports * * EU * * 3.57 China * * 2.73 India * * 4.33 Pakistan * 1.47* * 1.39 Exports * * 24.1 Indonesia * * 13.8* 13.89* Malaysia * * 7.74 Disappearance 34.27* * Ending stocks 12.8* * 9.16 Stocks/usage 18.7% 16.5% 15.7% 15.4% 14.5% MALAYSIA: Crude Palm Oil Futures Close Third position in Malaysian Ringgit/T 23 SepOct Nov Dec Jan Feb Mar Apr May Jun Jly Aug Sep Oct Nov DecJa18 Prices from 1 Sept 216 until 3 Jan 218 Source: ISTA Mielke GmbH, Oil World 7

8 What is the Outlook for Soybeans and Products? World soybean supplies still sufficiently ample in 217/18, ifourcrop estimatesmaterialize. Stocks seenat96 Mn T asofaugust 218. But weatherrisksstill persit in South America. Additional swing factors towatch: 1) Farmer selling--a new market factor 2) The crush economics 3)Chinese buying (timingandsize) So y b ean s : W o rld Sto c k s a s of e n d- Au g u st (M n T) F Source: ISTA Mielke GmbH, Oil World 8

9 S. American soybean crop to plunge in early 218 (our current estimateisfora dropof1 Mn T) Uncertainty In pastfewyears sizeable yield jump Soybean Crop Trend Since 74/75 (Mn T) U.S.A. Argentina, B razil & Paraguay 75/76 81/82 87/88 93/94 99/ 4/5 1/11 17/18F SOUTH AMERICA: Soybean Production (Mn T) 17/18F 16/17 15/16 14/15 13/14 Brazil * Argentina.. 5.* 54.6* 54.4* 6.* 5.* Paraguay.. 9.5* 1.5* 9.4* 8.4* 8.5* Bolivia * 2.7* 2.9* Uruguay * 3.45* 2.48* 3.4* 3.35* Total * Source: ISTA Mielke GmbH, Oil World 9

10 Source: ISTA Mielke GmbH, Oil World 1

11 SOYBEANS : World Supplies ( Mn T ) 17/18F 16/17 15/16 14/15 Opening stocks Production 344.3* N. Hemisphere * Russia&Ukraine 7.52* 7.64* Canada U.S.A China, P.R India * 1.5* 7.1* 8.5* S. Hemisphere * Argentina * 54.6* 54.4* 6.* Brazil * Paraguay * 1.5* 9.4* 8.4* Total supply 439.1* Despite a decline of 4 Mn T in world soybean production in 217/18 The SoyaCropwill still besufficientin 217/18 to satisfy anothergrowthin demandby11-12 Mn T without reducing stocks Production: Sunfl.seed -1.5 Rapeseed Oilseeds: World Production (Mn T) Soybeans Other 9 oilseeds / 1/2 3/4 5/6 7/8 9/1 11/12 13/14 15/16 17/18F Source: ISTA Mielke GmbH, Oil World 11

12 Imports of Soybeans (Mn T) China Rest of world /97 98/99 /1 2/3 4/5 6/7 8/9 1/11 12/13 14/15 16/ /96 97/98 99/ 1/2 3/4 5/6 7/8 9/1 11/12 13/14 15/16 17/18 O c t o b e r / S e p t e m b e r China imports likely to be boosted to 96 Mn T in 217/18. Soybeanimportsofall countries otherthanchina jumpedfrom38.2 Mn T in 212/13 andmayreach55.2 Mn T thisseason. India still prevents oilseed imports CHINA: Oilseed Output & Crushings Production (Mn T) Crushings (Mn T) 2 99/ 2/3 5/6 8/9 11/12 14/15 17/18F Feed usageup3% in 216/17 Soya meal consumption jumpedby11% in 216/17, benefitting from the steep reduction of imports of DDGS & Growing Importance of Soya Meal (Mn T) 9 Total Oilmeals 8 Soya Meal CHINA: Total Oilmeal Consumption 99/ 2/3 5/6 8/9 11/12 14/15 17/18F O c t o b e r / S e p t e m b e r Source: ISTA Mielke GmbH, Oil World 12

13 Strong demand increase for oilmeals from the livestock industry has boosted world productionofoilmeals by15% in 25 years Global dependence of soya meal increasing Declining supplies of fishmealandof sunflowermealin 217/18 12 Oilmeals: World Production (Mn T) Soyameal Other 11 oilmeals 7 3/4 5/6 7/8 9/1 11/12 13/14 15/16 17/18F O c t o b e r / S e p t e m b e r 1,2 CBOT: Daily Soybean Crush Margins Nearest forward position (in US-$/bu) 1,1 1,9,8,7,6 Sep16 Nov Ja17 Mar May Jly Sep Nov Ja18 Daily margins from Sept 216 until 3 Jan 218 Source: ISTA Mielke GmbH, Oil World 13

14 Weekly Prices of Soya Pellets, 47% Arg., fob (US-$/T) / / /18 216/17 25 Oct Nov Dec Jan Feb Mar Apr May Jun Jly Aug Sep Prices from 1 Oct 214 until 3 Jan 218 Concluding Statements The growth in world production is slowing down in 217/18. Effects on stocks and prices: O c t / S e p t Production of 17/18 16/ oils& fats Of which: Palm oil Lauric oils Soya oil Rape/canola oil Sunflower oil Grd+cotton oils Other oils/fats Source: ISTA Mielke GmbH, Oil World 14

15 Concluding Statements 17 OILS & FATS : World Supply & Demand ( Mn T ) Forecast O c t o b e r / S e p t e m b e r 17/18F 16/17 15/16 14/15 Op'g stocks Production * Change Imports * Exports * Consumption * Change End stocks * Stocks/usage % 12.5% 12.7% 15.7% RapidlyRisingWorld Demand ofoils& Fats Averagedemandgrowthin past 5 seasons: Total per year +6.5 Mn T Biofuel +1.7 Mn T Food/other +4.8 Mn T /9 17 Oils & Fats : World Consumption 92/93 biofuel 95/96 Total Usage in Mn T 98/99 1/2 food and other 4/5 7/8 1/11 13/14 16/17 Source: ISTA Mielke GmbH, Oil World 15

16 17 OILS & FATS: Consumption Change (in Mn T) O c t o b e r / S e p t e m b e r 17/18F 16/17 15/16 14/15 13/14 EU * U.S.A * Argentina * Brazil * China, PR. +.47* India * Indonesia * Malaysia * Others * World * Monthly Prices of Palm Oil & Crude Mineral Oil (US-$/T) Palm oil, crude, Rott. Crude mineral oil, Brent Premium palm oil vs crude oil Ja16 Mar May Jly Sep Nov Ja17 Mar May Jly Sep Nov Ja18 Monthly prices from Jan 216 until 3 Jan Source: ISTA Mielke GmbH, Oil World 16

17 Currently still ample supplies of soybeanskeepa lidon prices (Risk South American crop??) World stocksofoils& fats have increased, but arenot burdensome Weforecasta recoveryofoils& fatsstocksby2.3 Mn T in 217/ World Stocks in Percent of Annual Usage (%) 17 oils & fats 1 oilseeds F At the end of the season Implications on prices: 12 Prices ofpalmoilandsoyoilmay be trading sideways or slightly 11 higherin thenext4-8 weeks. 1 But a newpriceweaknesslikelyto 9 emerge from Apr 218 onward 8 Average Apr/June 218: 7 Crude palmoil(indon.) 62 (low 59) 6 5 Soya oil(fob Arg.) 74 (low 7) 4 Sunfl oil(fob Ukraine) 8 3 Dutch soya oil 83 Weekly Prices of Palm oil & Gas Oil (US-$/T) Crude palm oil, cif Rott. ICE Gas Oil (Spot) 2 Ja12 Jly Ja13 Jly Ja14 Jly Ja15 Jly Ja16 Jly Ja17 Jly Ja18 Dutch Rape oil 825 Weekly prices from January 212 until 23 Jan 218 Source: ISTA Mielke GmbH, Oil World 17

18 16 CBOT: Daily Soybean Futures (c/bu) March day moving average Ja17 Feb Mar Apr May Jun Jly Aug Sept Oct Nov DecJa18 Daily futures from 2 Jan 217 until 3 Jan CBOT: Daily Soya Oil Futures (c/lb) March day moving average CBOT: Daily Soya Meal Futures ($/ST) March day moving average Feb Mar Apr May Jun Jly Aug Sept Oct Nov Dec Ja18 Daily futures from 1 Feb 217 until 3 Jan Feb Mar Apr May Jun Jly Aug Sept Oct Nov Dec Ja18 Daily futures from 1 Feb 217 until 3 Jan 218 Source: ISTA Mielke GmbH, Oil World 18

19 5 Weekly Prices of 3 Oilmeals (US-$/T) Soy.meal, Argentina 49%, cif Rott. Rape meal,34%,fob ex-mill Hmb Palmkern exp. 21/22%, cif Rott. Ja15 Jly Ja16 Jly Ja17 Jly Ja18 Weekly prices from 1 Jan 215 until 25 Jan 218 Monthly Prices of Palm & Lauric Oils (in US-$/T) Palm oil, crude cif Rott. 22 Palmkernel oil, Mal/Indo., cif Rott. 25 Coconut oil, Phil/Indo. cif Rott '98'99''1'2'3'4'5'6'7'8'9'1'11'12'13'14'15'16 '17'18 January 1998 until January 218 Source: ISTA Mielke GmbH, Oil World 19

20 Monthly Prices of Palm & Lauric Oils (in US-$/T) Palm oil, crude cif Rott. Palmkernel oil, Mal/Indo., cif Rott. Coconut oil, Phil/Indo. cif Rott '13 '14 '15 '16 '17 '18 January 213 until January 218 Prices oflauric Oilsareseendecliningin 218 World Output ofthe2 Lauric Oils+.8 Mn T in 217/18 (against +.55 in 16/17 Palmkernel Oil : World Supply & Demand (Mn T) O c t o b e r / S e p t e m b e r 17/18F 16/17 15/16 14/15 Op'g stocks Production. 7.55* Change Imports * Exports * Consumption 7.3* Change End g stocks 1.1* Coconut Oil : World Supply & Demand (Mn T) O c t o b e r / S e p t e m b e r 17/18F 16/17 15/16 14/15 Op'g stocks Production. 2.77* Change Imports * Exports * Consumption 2.68* Change End g stocks.43* Sizeably risingstocksin > Narrowingofpricepremiumslikely Source: ISTA Mielke GmbH, Oil World 2

21 Daily Prices of 3 Oils in Rotterdam (US-$/T) Coconut oil,phil/indo,cif Rott Palmkern oil, Mal./Indo., cif Rott. Palm oil crude, cif N.W. Eur Jly14 Sep NovJan15 Mar May Jly Sep Nov Ja16 Mar May Jly Sep Nov Ja'17 Mar May Jly Sep DecJa18 Daily prices from July 214 until 3 Jan 218 Thank you for your attention! More market info required? Just get in touch with me: Thomas.Mielke@oilworld.de fon OIL WORLD marketinformationisavailabledaily, weekly and monthly Signupfora 3-week trialperiod Source: ISTA Mielke GmbH, Oil World 21

Global Supply, Demand and Price Outlook on Palm & Lauric Oils, Impacts from Arg. Drought. Emphasis also be given on the Chinese Outlook

Global Supply, Demand and Price Outlook on Palm & Lauric Oils, Impacts from Arg. Drought Emphasis also be given on the Chinese Outlook Presentation at POC 218 in KL on 7 March 218 Thomas Mielke, ISTA Mielke,