Highlights of this Issue

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1 No. 03, Vol January 2018 Highlights of this Issue M The increase in world oilseed crushings has slowed in Oct/Dec 2017 and will probably only show a below-average rise in Jan/March 2018 because of ample availability of palm oil. M For Oct/Sept 2017/18 we estimate Chinese soybean imports at a record 96.0 Mn T, up 2.5 Mn T from a year earlier, despite the boost in this season s domestic production. M World trade in rapeseed & canola is expected to contract in Jan/June 2018 on account of reduced purchases from the European Union, contrary to the first half of the season. M World exports of 8 oils only stagnated at the year-earlier level of 20.6 Mn T in Oct/Dec 2017, causing a reduction of stocks in India and other importing countries. M Higher than expected palm oil supplies exerted price pressure in recent weeks. The premium over crude mineral oil narrowed to US-$ 175, the smallest since Sept M The market's dependence on soya meal will increase in coming months because of tightening supplies of distillers dried grains, sunflower meal and fish meal. Copyright 2018 ISTA Mielke GmbH - Independent analysts and forecasters. This information service is destined for the subscriber only. Any copying, reproduction and/or redistribution of the proprietary content without the prior written permission of ISTA Mielke GmbH is strictly prohibited. Any violation of our copyright will be PROSECUTED. The information and analyses given in this publication are considered to be reliable. Every care is taken to ensure the accuracy and completeness of the contents. We cannot, however, accept any responsibility for them nor for the accuracy of our forecasts and opinions or any liability for their use. We are offering multi-user subscriptions at special rates. Publishers: ISTA Mielke GmbH, Executive Director: Thomas Mielke. - Langenberg 25, Hamburg, Germany; Phone: , Fax: , info@oilworld.de Internet:

2 OIL WORLD No. 3, Vol. 61 Price Survey Jan 19, 2018 OILSEEDS, CRUDE OILS, FATS, MEALS & GRAINS : Lowest Representative Asking Prices for Nearest Forward Shipment, in Bulk (excl. import duty, if any, US-$/Tonne) Jan Change Jan Jan Dec 2017 Nov 2017 Dec 2016 Jan Dec 2017 Jan Dec 2016 Soybeans, Brazil, cif Rott 412 F +2.5% 402 F 407 F 414(a) 419(a) 421(b) Soybeans, U.S., cif Rotterdam 406 Ap +3.3% 393 Ap 405 Ap Soybean oil, US, fob Gulf 760 F -3.3% 786 Ja 796 Ja Soybean oil,u.s.,fob Decatur(c) % Soybean oil,dutch, fob ex-mill 850 F -3.1% 877 Ja/F 878 Ja/F Soybean oil, Brazil, fob 748 F -2.6% 768 Ja 782 Ja Soybean oil, Argentina, fob 749 F -2.3% 767 Ja 785 Ja Soy.meal,44/45%,Hmb,fob exmill 360 F +2.6% 351 Ja 348 Ja Soya pell, 48%, Brazil, fob 346 F +4.5% 331 Ja 335 Ja Soya pell, 47%, Arg, fob 353 F +4.4% 338 Ja 344 Ja Soya meal, 49%,Arg,cif Rott 384 F +2.4% 375 Ja 372 Ja Soya pell, 48%,Brazil,cif Rott 376 F +2.5% 367 Ja 359 Ja Soymeal Yell 48% Ex-Kandla fas 405 Ja +3.8% 390 Ja 375 Ja Groundnuts, US Runners 40/50(d) 1225 F 0.0% 1225 Ja 1225 Ja Grnd'nt oil,any orig,cif Rott 1330 Mr/Ap Mr/Ap Sunseed, EU, cif Amsterdam 397 F +0.3% 396 F 398 Ja/F Sunseed, fob Black Sea 373 F +0.8% 370 F 373 Ja Sunoil, EU, fob N.W.Eur. ports 780 F +0.6% 775 F 775 F Sunoil, Arg., fob 735 F -2.0% 750 Ja 755 Ja Sunoil, fob Black Sea 750 F +0.3% 748 F 745 F Sunmeal, Ukraine, DAF 175 F +1.7% 172 F 172 Ja/F Rapeseed,Europe,00,cif Hamburg 420 Ja -1.2% 425 Ja 429 Ja Rape oil,dutch, fob ex-mill 832 F -3.1% 859 F 877 Ja Rape meal,34%,fob ex-mill Hmb 240 Ja +3.0% 233 Ja 228 Ja Corn oil, U.S., fob Midwest Ja 737 Ja Corn oil, U.S., fob Gulf 860 Ja/F 0.0% 860 Ja 860 Ja Olive Oil,Spain,Extra Virgin(e) 4500 Ja/F +3.0% 4370 Ja 4335 Ja Palm oil crude, cif Rotterdam(f) 664 F -3.1% 685 Ja 693 Ja Palm oil RBD, Mal, fob 645 F -1.8% 657 Ja 651 Ja Palm oil crude, Indonesia, fob 632 F -2.5% 648 Ja 640 Ja Palm olein RBD, Mal, fob 649 F -1.7% 660 Ja/F 657 Ja Palm olein RBD, Mal, cif Rott 704 F -1.5% 715 Ja/F 712 Ja Palm stearin RBD, Mal fob 660 F -1.2% 668 Ja 659 Ja Palm stearin RBD, Mal,cif Rott 715 F -1.1% 723 Ja 714 Ja Palmkern oil,mal/indo,cif Rott 1245 F/Mr -1.2% 1260 F/Mr 1300 F/Mr Palmkern exp,21/23%,cif Rott 176 Ja/F +4.8% 168 Ja 157 Ja Copra, Phil/Indo, cif N.W.Eur 940 F +0.5% 935 Ja 975 Ja Coconut oil,phil/indo,cif Rott 1405 F/Mr -0.7% 1415 F/Mr 1440 F/Mr Copra exp.pell. Phil, domestic Ja 164 Ja Butter, Germany, 25kg, min 82% % Lard, EU, unrefined, 0.5%(g) 630 F/Mr 0.0% 630 F 635 Ja Fish oil,any orig,cif N.W.Eur 2000 F 0.0% 2000 Ja/F 2000 Ja Fish oil, Peru, fob 2400 F 0.0% 2400 Ja/F 2300 Ja Fishmeal, 64/65%, Bremen fca 1590 Ja/F +1.9% 1560 Ja/F 1505 Ja Fishmeal, Peru FAQ, fob 1700 F 0.0% 1700 Ja/F 1550 Ja Fishmeal Peru fob Super Prime 1950 F 0.0% 1950 Ja/F 1900 Ja Linseed, Russia, cif N.W.Eur 430 Ja/F +2.4% 420 Ja 418 Ja Lin oil,any orig,ex-tank Rott 837 Ja/F +1.7% 823 Ja 820 Ja Lin exp,min.41% profat,fot Bel 380 Ja/F +1.3% 375 Ja 365 Ja Castor oil, ex-tank Rotterdam 1610 Ja/F -0.9% 1625 Ja 1660 Ja Tung oil,s.america,ex-tank Rot 4670 Ja -0.1% 4675 Ja 4490 Ja (h) Tallow,US,bleach.fancy,cif Rot Ja 735 Ja Tallow, Edible, US, fob Gulf 750 Ja/F 0.0% 750 Ja 740 Ja Wheat,U.S.,No.2,SRW, fob Gulf 185 F 0.0% 185 Ja 185 Ja 182(h) Corn,U.S.,No.3,Yellow,fob Gulf 165 Mr +1.2% 163 F 165 F (a)feb shipment. (b)march shipment. (c)prompt. (d)shelled basis; cif Rotterdam. (e)domestic, fob ex-mill, max. 0.8% ffa. (f) 5% ffa, Malaysian/ Indonesian origin. (g)packers' lard ex-mill. (h)2 weeks only. Hamburg Market Prices - On Jan 18, 2018 prices closed in EURO per tonne: Soya meal: fob ex-mill: Jan a, Feb a, Mar a. Soya oil, crude: fob ex-mill: Jan 710a, Feb 700a, Mar 685a. Rape meal: fob ex-mill: Jan a, Feb a, Mar/Apr a. Rape oil, refined: Feb 765a, Mar/Apr 762a, May/Jul 750a. Soybean Crush Conversions in Euro per tonne: First position +25 as of Jan 18 and +33 as of Jan 11. Rapeseed Crush Conversions in Euro per tonne: First position +36 as of Jan 18 and +38 as of Jan 11. Exchange Rate on Jan 18, 2018: 1 EUR = US-$ and Jan 11, 2018: 1 EUR = US-$ Monthly averages: 1 EUR = US-$: Dec 2017: , Nov 2017:

3 OIL WORLD No. 3, Vol. 61 Page 21 Jan 19, 2018 PRICES Bearish Price Outlook for Veg. Oils, While Soya Meal Will Have to Finance a Larger Share of the Crush Value Palm oil prices came under pressure of late and eased by about US-$ or 2-3% in the week to Jan 18. Although production will be slowing down seasonally in Jan/March, stocks are currently still very high in the producing countries. The negative sentiment in the market was partly fuelled by the news that the European Parliament voted to ban palm oil as a feedstock for biofuel production in the EU from 2021 onward. This decision does not mean that the EU has adopted a final decision, but it is one step in a complex legislative procedure, reportedly aiming at replacing food-based biofuels by more advanced feedstock. This week s decision has been strongly criticized by representatives of major palm oil producing countries, calling it a discrimination against palm oil. But for the moment the EU market remains open to palm oil. In fact, our latest estimates point to record EU palm oil imports of 7.7 Mn T for food and non-food purposes, up steeply from 7.1 Mn T in 2016 and the previous high of 7.4 Mn T in Jan/Dec In our opinion palm oil prices are low enough for the time being and likely to appreciate in the next 4-8 weeks. Production will be slowing down while purchases from importing countries will probably pick up. Contrary to last year palm oil prices are currently attractive. We estimate world palm oil consumption to be up by 1.0 Mn T from a year earlier in Jan/March. Stocks will decline but stay well up from last year as of end-march. But palm oil prices should come under pressure in April/June 2018 and probably beyond, if our forecast of a sizable increase in world palm oil stocks as a result of the global production surplus will materialize in April/Sept Downward pressure on prices, however, will be limited by significant growth in palm oil demand for food in many developing countries. Also biodiesel production is likely to rise in Indonesia. The recent rally in crude oil prices combined with lower palm oil prices has improved the profitability of palm oil in the energy sector. We estimate prices of RBD palm olein, fob Malaysia, to average US-$ 635 for nearest forward shipment in April/June 2018, which probably implies a price low of around US-$ 600 sometime in June. World supplies of palm oil are likely to be ample in Jan/Sept 2018, rising by 4.3 Mn T compared with a year-on-year increase of 3.5 Mn T in Jan/Sept This is true although the global production growth is slowing from 6.9 Mn T in Jan/Sept 2017 to 2.3 Mn T in Jan/Sept The difference comes from the much higher opening stocks at the beginning of January 2018 in contrast to a year-on-year decline of 3.4 Mn T as of early January Soya oil is likely to suffer from spill-over price weakness from palm oil. This is likely to pressure soybean crush margins. This is primarily true for Argentina, particularly as long as sufficient export demand for soya oil from India, China and other countries is lacking. Also, the outlook for Argentine biodiesel exports is currently poor. Argentine soybean production prospects have deteriorated. The dryness has become very severe in many parts of the country. We have cut our crop estimate to 52.0 Mn T and further downward revisions may become necessary as there is very little rain in the forecast for the near to medium term. However, farmer selling is probably more important than the actual size of the soybean crop. Reserved sales will support soybean prices in Argentina and may lead to lower than expected soybean crushings in Jan/March This may ultimately create a situation in which soya meal prices will have to finance a larger share of the crush value. Some spill-over strength may also be generated from the tightness in fish meal and probably from sun meal. to be continued on page 26 PRICE FORECASTS & Past Prices for the Leading Commodities - in US-$ per Tonne July / June J u l y / J u n e Apr/ June Jan/ Mar Oct/ Dec July/ Sept Apr/ Jun Jan/ Mar 17/18F Change 16/17 15/16 14/15 13/ F 2018F Soybeans, US cif R dam * -2% * 405* Soya oil,dutch, fob ex-mill.. 855* +2% * 860* Soya oil, Arg. fob * +1% * 766* Soyapell,48%, Arg., Rott * -3% * 375* Sunseed, EU, Low. Rhine.. 405* -1% * 402* Sun oil, EU fob N.W.Eur * -0.2% * 807* Sun oil, fob Black Sea * +3% * 770* Sun meal, Ukraine, DAF * -7% * 174* Rapeseed,Europe,cif Hmb.. 424* -1% * 420* Rape oil, Dutch, fob ex-mill 863* +1% * 852* Rape meal,fob ex-mill Hmb 220* - 3% * 230* Palm oil crude, cif N.W.Eur 681* -7% * 680* Palm olein RBD, Mal. fob * -7% * 665* Palmkern oil, cif Rotterdam 1245* -8% * 1250* Coconut oil, cif Rotterdam * -11% * 1380*

4 OIL WORLD No. 3, Vol. 61 Page 22 Jan 19, OILSEEDS World Oilseed Production Seen Exceeding Consumption, Despite Marginal Setback in Soybeans Argentine soybean crop deteriorating. - - Chinese soybean imports estimated at 96.0 Mn T in Oct/Sept 2017/18. World production is set to exceed consumption in 2017/18 for the second consecutive year. This is true for soybeans, despite the prospective decline in South America in early 2018 and despite the latest downward revision by 0.9 Mn T in the US soybean crop. And it is also true for the 6 other oilseeds which are seen increasing by a combined 6.5 Mn T, according to our current estimates, mainly on account of rapeseed and cottonseed. The year-on-year increase in oilseed crushings has slowed somewhat in Oct/Dec 2017 and will probably again only show a below-average rise in Jan/March 2018 because of ample availability of palm oil, contrary to a year earlier. The prospective year-on-year growth in oilseed consumption is likely to slow to around 20 Mn T in the world crop year 2017/18 compared with 26 Mn T in 2016/17. At 553 Mn T consumption of 7 oilseeds is estimated to exceed production by about 4 Mn T. As a result, stocks worldwide are seen rising to a new high of 113 Mn T at the end of this season compared with 109 a year and 91 Mn T two years earlier. We forecast soybean stocks to rise by 2.4 Mn T to 97 Mn T worldwide at the end of this season. These estimates are based on our current forecasts of production and consumption. There are still many uncertainties, primarily weather conditions and crop development in South America in the next few weeks. Also demand and purchases from China and other countries will have to be monitored closely. 7 OILSEEDS: World Supply and Demand ( Mn T ) Forecast Change 2017/18F to 16/17 16/17 15/16 Opening stocks Production * thereof: Soybeans 347.0* Sunseed * Rapeseed * Cottonseed * Groundnuts (b) * Palmkern & Copra 21.7* Total supplies * thereof: Soybeans 441.7* Disappearance * thereof: Soybeans 344.7* Sunseed * Rapeseed * Ending stocks * thereof: Soybeans 97.0* Sunseed * Rapeseed * Stocks/usage (a) 20.5% 20.4% 17.9% thereof: Soybeans 28.1% 28.6% 24.6% SOYBEANS World soybean supplies likely to remain ample in 2017/18. Despite a slight setback in world production, there will still be a global production surplus of around 2 Mn T. The prospective decline in stocks in South America from a year earlier as of end-august will be more than offset by increases in the USA, China and a few other countries. The Argentine soybean crop is in trouble and we have cut our production estimate to 52 Mn T, a 4-year low. Reduced production is also anticipated for Brazil and Paraguay. But world soybean supplies are still seen rising by 16 Mn T to 442 Mn T in 2017/18, due to sharply higher opening stocks (up 16.7 Mn T) and a sizable increase in northern-hemisphere production to 168 Mn T (up 6.7 Mn T). The recent downward revision of the US soybean crop by 0.9 Mn T from the previous estimate has been more than offset by an upward revision by the Chinese soybean crop to 16.7 Mn T. SOYBEANS : World Supply and Demand ( Mn T ) 17/18F 16/17 15/16 14/15 Opening stocks Production * N. Hemisphere * EU * Russia&Ukraine 7.52* 7.64* Canada U.S.A China, P.R India * 10.50* 7.10* 8.50* S. Hemisphere * Argentina * 54.60* 54.40* 60.00* Brazil * Paraguay * 10.00* 9.40* 8.40* Total supply * Crush (Sept/Aug) * Other use * Ending stocks 97.00* U.S.A. Aug * Argentina Aug * 30.76* 28.60* 30.96* Brazil Aug * 30.06* 19.96* 24.10* Other countries 26.66* 25.59* 24.03* 23.15* Stocks/usage 28.1% 28.6% 24.6% 27.9% US soybean stocks are still seen rising sharply to 13.5 Mn T as of end-august US exports are likely to recover in the second half of this season, but total

5 OIL WORLD No. 3, Vol. 61 Page 23 Jan 19, 2018 US soybean exports for the full season are still estimated to decline to 58.4 Mn T. The prospective further increase in US soybean crushings cannot prevent another remarkable accumulation of stocks. However, South American crop developments will have to be monitored regarding crop size and farmer selling. U.S.A. : Soybean Supply & Demand ( Mn T ) S e p t e m b e r / A u g u s t 17/18F 16/17 15/16 14/15 13/14 Op. stocks Crop Imports....69* Exports * Crushings * * 47.38* Other use 3.82* * 2.77* End. stocks * Stocks/usage 11.7% 7.2% 5.0% 4.9% 2.6% World exports of soybeans are forecast to rise by 9.1 Mn T to Mn T in Sept/Aug 2017/18. Brazil is dominating the scene with a further expansion of its market share to 44%. Exports from Canada, Paraguay and Uruguay are forecast to rise further. The Argentine export performance is still unclear and actual exports may turn out lower than we are currently estimating. Soybean exports to China have slowed somewhat in recent weeks. Following the boost in imports in preceding months and the creation of large stocks until end-december, we would not be surprised to see a slowing-down of Chinese imports in Jan/March 2018, probably stagnating at the year-ago level. But for Oct/Sept 2017/18 we estimate Chinese soybean imports at a record 96.0 Mn T. This is up 2.5 Mn T from a year earlier, despite the boost in this season s domestic soybean production by almost 5.0 Mn T. Imports of that magnitude would allow a significant increase in soybean crushings by 5.6 Mn T in Oct/Sept 2017/18, an increase by 1.4 Mn T in other uses of soybeans and a further accumulation of stocks in China. SOYBEANS : World Exports ( Mn T ) September / August Mar / Aug Sept / Feb 17/18F 16/17 15/ F /18F 16/17 Argentina 8.33* * * 1.40 Brazil 67.06* * * 7.83 Paraguay 6.11* * * 1.75 Uruguay 3.41* * *.30 Subtotal 84.91* * * U.S.A * * * Canada 5.25* * * 3.69 Ukraine 2.38* * * 1.90 Oth. c tries 2.18* * *.98 World * * * Update for South America: Soybean crop prospects have deteriorated in Argentina due to insufficient rainfall, while conditions are largely favourable in Brazil (with a few exceptions) and improvements were reported from Uruguay and Paraguay. Overall, South American soybean production will be down from last year, but the extent of the reduction is still unclear. Increased old-crop carry-over stocks at the beginning of 2018 will somewhat cushion the prospective decline in production this year. At the beginning of January old-crop soybean stocks in Brazil were around 4.5 Mn T, which is less than expected earlier but still up from 3.7 Mn T a year earlier. Argentine soybean stocks are currently record large for this time of the year. But some sources suggest that the soybean crop estimate for last year needs to be revised downward, which is curbing the year-on-year increase in Argentine stocks at the beginning of Argentina: We have made a downward revision in our soybean crop estimate to 52 Mn T compared with our estimate of 54.6 Mn T produced in early The rainfall in the week to Jan 18 was less than expected and, by far, insufficient to replenish soil moisture supplies which had been depleted as a result of belownormal rainfall in Nov, Dec and the first half of January. Several important growing areas of Cordoba, La Pampa, Entre Rios and the central and northern Buenos Aires provinces are unfavourably dry. It remained dry also in Chaco in the north during the first 18 days of January. Soybean planting intentions could not be fully completed. Also, a record share of 28-30% of this year s Argentine soybean area (about Mn ha) has been planted with quicker-maturing (second crop) soybean varieties. Late plantings and quicker-growing varieties will reduce this year s yield potential. Forecasts for the second half of January again point to below-normal rainfall. If that occurs, production prospects will deteriorate further. There are already some observers who talk about the possibility of a further downward revision in the Argentine soybean crop estimate to about 50 Mn T. Brazil: There is a relatively wide range of crop estimates at the moment. Conditions are generally favourable in most of Mato Grosso, Mato Grosso do Sul and southern Goias. But it is too wet in Parana, southern Mato Grosso do Sul and in Santa Catarina, stimulating a further spreading of the Asian rust fungus. The fungus is currently more widespread than last year. Dryness is still reported from most of Rio Grande do Sul and parts of Bahia and Minas Gerais. Soybean plantings in Brazil reportedly exceeded expectations. We have made an upward revision in our Brazilian soybean crop estimate to Mn T from Mn T in early Dec 2017 on account of an upward revision in the soybean area by 0.4 Mn ha to 35.1 Mn ha vis-a-vis 33.9 Mn ha a year earlier. Still, we expect the average yield for soybeans to drop by 7% to 3.1 T/ha. RAPESEED & CANOLA Prices were again under pressure in mid-january with rapeseed on the Matif closing at a new 18-month low of EUR 344 per tonne in the first position (Jan 17) and canola futures in Winnipeg closing at Can-$

6 OIL WORLD No. 3, Vol. 61 Page 24 Jan 19, 2018 in the first contract on January 16. There are several bearish factors which may continue to keep prices on the defensive in the medium term: 1) Current stocks of rapeseed & canola are very high, primarily in the European Union, Canada and Australia, partly due to higher than expected production and partly due to disposals which stayed below potential. 2) In the European Union rapeseed stocks were up by about 2 Mn T from a year earlier as of end-dec 2017, due to larger than expected production, reserved farmer selling, record imports in July/Dec and only a slight increase in crushings (caused by subdued rapeseed oil demand). Much will now depend on the selling policy of EU farmers which are way behind their usual selling plan. If they throw in the towel and step up selling in the next few weeks, rapeseed futures on the Matif may fall below EUR 340 soon. 3) World rapeseed production has exceeded expectations in 2017/18. Our new estimate of 65.8 Mn T is 0.5 Mn T above our assessment a month earlier and 2.3 Mn T above last season. RAPESEED & CANOLA: World Supply & Demand (Mn T) 17/18F 16/17 15/16 14/15 13/14 Open g stocks Production * EU * Russia Ukraine * 1.29* 1.90* 2.30* 2.47* Canada * U.S.A * China * 5.70* 8.00* 10.00* 11.60* India * 7.00* 5.70* 5.00* 6.70* Australia * 4.40* 2.95* 3.47* 3.83 Total supplies 72.44* Crush (July/June) 62.22* Other use * End g stocks * EU-28 (Jun 30) 1.74* Canada (July31) 2.35* * Other countries 3.64* Stocks/usage 11.9% 10.5% 9.8% 8.9% 11.2% 4) We expect stocks of rapeseed to accumulate in 2017/18, primarily in Canada and the European Union. In the EU the current supply surplus could result in record stocks as of end-june Major variables to watch are EU imports and crushings in Jan/June. World trade in rapeseed & canola is expected to contract in Jan/June 2018 on account of reduced purchases from the European Union, contrary to the first half of the season. In July/Dec 2017 world exports jumped by 0.9 Mn T to a record 8.5 Mn T, mainly on account of increases in shipments from Ukraine and Canada. Imports were boosted by 0.5 Mn T from a year earlier in the European Union and by 0.6 Mn T in China. Moderate increases were registered in Japan and Mexico. Rapeseed & Canola : World Trade ( Mn T ) Jan / June July/Dec Exports 2018F EU-28.10* *.32 Ukraine....10* Russia....06* *.05 Canada * * 5.05 Australia * * 1.14 Oth. c tries.20* *.19 Total * Imports EU * * 1.50 U.S.A * *.32 Mexico....68* *.80 China,PR * * 1.57 Japan * * 1.21 Pakistan....44*.48*.67*.56*.62* U.A.E *.46*.31.39*.50 Oth. c tries.29* *.42 Total * European Union: In view of the expected sharp decline in EU imports of rapeseed & canola in Jan/June 2018, total imports are now estimated to fall to 3.9 Mn T in July/June 2017/18 (down 21% or 1.1 Mn T). Larger than expected Australian export supplies and the EU- 28 : Rapeseed Supply & Demand ( Mn T ) J u l y / J u n e 17/18F 16/17 15/16 14/15 13/14 Opening stocks Output * thereof: France * Germany Poland * U.K * Czech Rep Romania * Imports (a) * thereof: Ukraine. 1.62* Canada....30* Australia * Exports (a)....25* Crushings * Other use (b)....89* Ending stocks * (a) EU intra-trade is excluded. (b) Residual.

7 OIL WORLD No. 3, Vol. 61 Page 25 Jan 19, 2018 reportedly high oil content of Australian canola, however, may push actual EU imports above current estimates. Still, fundamentals point to a sizeable increase in EU rapeseed stocks to Mn T at the end June, owing to weak domestic rape oil demand that is likely to limit rapeseed crushings to 24.3 Mn T during the current season. As we pointed out in the WEEKLY of Jan 12, an only marginal increase in the winter rapeseed area and partly detrimental weather conditions are likely to limit the increase in EU rapeseed production to Mn T in This is likely to boost EU rapeseed supplies by 1.0 Mn T to a 4-year high of 24.2 Mn T at the start of the 2018/19 season, keeping new-crop prices under pressure. SUNFLOWERSEED The setback of this season s production and frontloaded crushings in the first few months of 2017/18 led to a significant year-on-year decline of sunflowerseed stocks by an estimated 1.0 Mn T in Russia and by 1.6 Mn T in Ukraine at the end of Dec. For Jan/Sept 2018 we now forecast a significant reduction of crushings by a combined 2.1 Mn T in the two countries, following the decline of only 0.2 Mn T in Oct/Dec There is still considerable uncertainty about the size of this season s Russian sunflowerseed production, primarily because it is unclear how much of the crop will be harvested in spring. There is the risk that production falls slightly short of our current estimate of 10.7 Mn T. In contrast, sunflowerseed supplies will continue to stay ample in the EU, Turkey, Kazakhstan and a few other countries in Jan/Sept 2018 thanks to the record crops. We have raised our crop estimate for Spain this month, bringing total 2017 EU sunflowerseed production to a new high of 9.6 Mn T (up 1.1 Mn on the year). SUNSEED : World Supply & Demand ( Mn T ) 17/18F 16/17 15/16 14/15 13/14 Open g stocks Production * EU * Russia * 11.70* 9.70* 9.00* 10.20* Ukraine * 15.10* 12.10* 10.25* 11.00* U.S.A Argentina * 3.30* 2.83* 3.00* 2.37* China,P.R * 2.75* * 2.42 Turkey * 1.47* 1.35* 1.35* 1.60* Total supplies * Crush (Sept/Aug) * Other use * End g stocks * EU-28 (July 31)...95* Russia & Ukraine.59*.70*.64*.47*.60* Argentina (Sep 30).72*.70*.65*.97*.72* Other countries 1.33* 1.53* 1.28*.92*.94* Stocks/usage % 7.6% 7.8% 7.4% 6.8% This is likely to keep EU crushings sharply above the year-earlier volume also in the further course of 2017/18 and to curtail import demand for sunseed and products, thus moderating the bullish price impact of reduced sun oil & meal output and exports of Russia and Ukraine. EU sunflowerseed imports declined by 0.2 Mn T on the year in Aug/Dec EU exports, on the other hand, rose from a year before in Oct/Dec, but due to the setback in Aug/Sept they virtually stagnated in Aug/Dec Similar to the EU, last year s record crop kept Turkish sunflowerseed stocks above the year-earlier volume at the beginning of This is likely to continue to result in year-on-year increases of sunflowerseed crushings in coming months and to keep Turkish appetite for sunflowerseed and product imports in check. Owing to unfavourable weather in the Buenos Aires province we have reduced our 2018 sunflowerseed production estimate for Argentina by 0.1 Mn to 3.6 Mn T, still a multi-year high and up from a year before. Harvesting is already underway but has so far occurred mainly in northern Argentina where conditions were favourable for the development of sunflowers. Under the lead of Russia, Ukraine and Serbia world sunflowerseed exports declined in Oct/Dec 2017 and are likely to continue to fall short of the year-earlier volume in Jan/Sept 2018, despite larger shipments from the EU, Kazakhstan and China. Imports are seen declining in the EU, Pakistan, Iran and Turkey this season, but we expect higher deliveries to Serbia, Egypt, the US and China. COTTONSEED Our estimate of global cottonseed output in 2017/18 has been reduced somewhat to 42.9 Mn T but still implies a large increase of 3.6 Mn T from a year ago owing to the bumper crops harvested in the US, India, Pakistan and several other countries. We forecast cottonseed crushings to increase by 1.8 Mn T this season, thereof India 0.5 Mn T as well as Pakistan and China Mn T each. Rising US export supplies are competing with growing Australian exports this season, possibly lifting global exports to 1.1 Mn T, up from 0.95 Mn T in 2016/17 and 0.86 Mn T the year before. In the final USDA estimate released on Jan 12 this season's US cottonseed production was lowered slightly to 6.10 Mn T, still implying a steep increase of 1.2 Mn T from a year ago. The bulk of the additional supplies will be absorbed by the US feed sector, promoted by relatively low prices. Domestic cottonseed quotations stabilized recently but are likely to remain under pressure, given strong competition mainly from soya meal. US cottonseed crushings increased less than expected, viz. by only 14% in Aug/Nov 2017, requiring a major downward revision of our crush estimate for the full season to 1.9 Mn T. The decline of the crush capacity in recent years has apparently become a limiting factor for the processing volume this season. This is keeping the export supply pressure in cotton oil somewhat below expectations.

8 OIL WORLD No. 3, Vol. 61 Page 26 Jan 19, 2018 US cottonseed exports virtually doubled from a year ago to 153 Thd T in Aug/Nov 2017, thereof to Mexico 78, South Korea 36 and Saudi Arabia 16 Thd T. Exports are thus also an important outlet for the ample supplies but will not prevent a further accumulation of US cottonseed stocks this season. U.S.A.: Supply & Demand of Cottonseed (1000 T) A u g u s t / J u l y 17/18F 16/17 15/16 14/15 13/14 Open. stocks(a) 450* 190* Production Imports... 10* Exports * Crushings * * Other use (b) 3641* 2740* 2283* End. stocks(a) 600* 450* 190* (a) at mills only. (b) Mainly usage for dairy cattle. COTTONSEED: World Supply & Demand ( Mn T ) 17/18F 16/17 15/16 14/15 Op. Stocks Production 42.88* C.I.S * 2.56* Africa * 2.56* U.S.A Brazil * China, P.R * 8.50* 8.70* India * 10.66* 10.70* 12.50* Pakistan * 3.33* 3.07* 4.44 Turkey Australia Total supply * Crush (Oct/Sep) 30.60* compensated by larger shipments from China and Brazil. GROUNDNUTS (a) : World Exports (1000 T) Jan/ Dec U.S.A. Argentina China, P.R. India Brazil Oth. ctrs. World * * 610* * 2681* (a) Shelled basis. GROUNDNUTS (shelled basis) : World Balance (Mn T) 17/18F 16/17 15/16 14/15 Opening stocks Production * Africa * 7.89* U.S.A Argentina....85*.86*.81*.83* China,P.R * 11.90* India * 4.80* 3.20* 3.40* Total supply * Crush (Oct/Sept) 10.36* Other use * Ending stocks * U.S.A. July *.75*.80*.72 Argentina Sep 30.49*.50*.41*.52* China, PR Jun 30.60*.52*.44*.43* India, Sep 30.22*.24*.03*.05* Other use * Ending stocks 2.40* U.S.A. (July 31).60*.45*.19*.28 GROUNDNUTS Plantings of groundnuts in Argentina had been delayed by a lack of rainfall in recent weeks but were almost completed in mid-january on an area of close to 400 Thd ha according to official data, a three-year high and roughly 10% more than a year ago. Important groundnut areas are in need of rainfall but so far the crop withstood the dryness reportedly quite well. The 2017 US groundnut crop is now pegged at 2.46 Mn T (shelled), down sharply from the preceding estimate of 2.60 Mn T but still exceeding the previous year by 30%. Even after the downward revision US groundnut supplies are still ample to burdensome with stocks in commercial storage at the end of November 17% higher than a year earlier. US exports and crushings of groundnuts declined sizably on the year in Aug/Nov 2017, adding to the supply glut. World exports of groundnuts approached a high level of almost 2.7 Mn T in 2017 according to our preliminary estimates, down roughly 0.1 Mn T from the exceptionally large volume registered the year before. Less exports from the US and Argentina were partly Continued from page 21: Prices of rapeseed & oil are likely to stay under pressure in Jan/June Driving factors are the current supply surplus in Europe and larger than expected production and export supplies in North America and Australia. Rapeseed oil demand suffered from high prices in recent months. Rapeseed oil developed price discounts vis-a-vis soya oil in Europe lately, but this will probably not prevent unusually high rapeseed stocks to be carried over into the next season. Prices of sunflowerseed & products are seen appreciating in the near to medium term on declining supplies. In April/June we consider it likely that sun oil will develop price premiums over rapeseed oil for the first time in almost two years. Crude mineral oil prices have strengthened sizably to 3-year highs. It remains to be seen whether Brent crude oil can stay at around US-$ 70 per barrel. The future trend will also impact vegetable oil prices in coming months. Observers are divided over the future price trend. We would not be surprised to see some setback in the medium term. tmie

9 OIL WORLD No. 3, Vol. 61 Page 27 Jan 19, OILS Production Surplus Shaping Up in 2017/18, But Supplies Are Not Burdensome Ampleness in palm oil partly offset by tightening of sunflower oil supplies and looming pick-up of export demand Prices of vegetable oils had been under pressure recently, affected by the 14 Mn T boost in production in Jan/Dec 2017 and the resulting accumulation of stocks. Palm oil accounted for roughly 60% of the production increase. With demand increasing sizably by an estimated 6.5 Mn T in 2017 there was still scope for a recovery of stocks by around 1.8 Mn T last year despite the decline of rapeseed oil inventories by approximately 0.9 Mn T. In 2018 we expect a further production growth in palm oil, though being curtailed by labour shortages and rising replanting requirements. The production increase in soya oil is likely to diminish somewhat and will be subject to imponderables like the final crop sizes and farmer selling in the southern hemisphere which will have an impact on crush margins. World production of rapeseed oil is seen recovering for the first time in 4 years but this will contrast with a downturn of sunflower oil output in Jan/Sept In sum, world production of 8 major vegetable oils is expected to increase rather moderately by 4.4 Mn T in Jan/Sept However, when taking the substantial year-on-year increase primarily of palm oil stocks into account, world supplies of 8 oils are forecast to increase by 6.1 Mn T in Jan/Sept, coming close to 6.3 Mn T achieved a year ago from a low basis of comparison. 8 VEGETABLE OILS: World Balance ( 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 Op g stocks Production * Change +3.8% +8.0% -1.9% +2.8% +6.5% Imports * Exports * Consumption * Change +3.0% +3.2% +3.6% +2.5% +5.5% End g stocks 26.57* Stocks/use ratio 14.4% 13.4% 13.4% 17.2% 16.3% imports. This contrasts with an expected decline of vegetable oil use in Argentina due to the looming downturn of biodiesel production, unless Argentine biodiesel exports to the EU exceed expectations in coming months. World exports of 8 oils only stagnated at the yearearlier level of 20.6 Mn T in Oct/Dec 2017, partly reflecting a temporary absence of Indian importers after the import duty increase. The reduction of the trade volume caused a major decline of vegetable oil stocks in India and in other importing countries, prompting us to expect a pick-up of world exports possibly already in Jan/March In the current quarter we expect world exports of 8 oils to increase by 0.2 Mn T and of palm oil by even Mn T on the year. In April/Sept world exports are forecast to increase by 0.8 Mn T for the 8 oils, with major increases in soya oil, palm oil and lauric oils more than offsetting the prospective decline in sunflower oil exports in the vicinity of 0.7 Mn T. World stocks of 8 oils are forecast to decline seasonally to 24.0 Mn T by end-march 2018, still exceeding the year-ago level by 1.1 Mn T. By end-sept 2018 we peg stocks at 26.6 Mn T, up 2.5 Mn T from a year ago, lifting the stocks-usage ratio to 14.4%, against the relatively low level of 13.4% registered in the preceding two seasons. PALM OIL Higher than expected palm oil supplies exerted price pressure in recent weeks, making palm oil more attractive both in the food industry as well as for biofuels. For the average of the first 18 days of January crude palm oil, fob Indonesia, was quoted at US-$ 645 (down 16% from a year earlier), RBD palm olein, fob Malaysia, at US-$ 656 (down 14%) and crude palm oil, cif Rotterdam, at US-$ 682 (down 16%). Crude mineral oil prices appreciated to a 3-year high lately, with Brent oil slightly exceeding US-$ 70 per barrel or the equivalent of US-$ 508 per tonne. The expected increase of world consumption of 8 vegetable oils by Mn T in Oct/Sept 2017/18 is near the growth registered last season. However, demand developments in the major countries are seen changing significantly: in Indonesia the consumption growth is expected to pick up from 0.4 Mn T in 2016/17 to roughly 0.7 Mn T this season since the diminished price premium of palm oil over crude mineral oil raises the volume of biodiesel that can be subsidized with the returns from the export levy. Following the recent withdrawal of the EU Council appeal, the duties on Indonesian biodiesel of 9-21% are likely to be annulled soon, probably allowing Indonesian biodiesel to regain market share in Europe. In the US the demand growth is expected to double to 0.6 Mn T since biodiesel requirements are increasingly satisfied with domestic production instead of

10 OIL WORLD No. 3, Vol. 61 Page 28 Jan 19, 2018 As a result, the premium of palm oil over crude mineral oil narrowed to US-$ 175, the smallest premium since Sept 2015 and considerably less than the premiums of US-$ 252 for Nov 2017, US-$ 314 in Sept 2017 and premium of US-$ 399 in Jan World palm oil production exceeded expectations and increased to 18.1 Mn T in Oct/Dec 2017 (up 1.5 Mn T from a year earlier). This was mainly on account of Malaysia with a boost to 5.8 Mn T, the highest quarterly production ever recorded and up 1.06 Mn T from a year earlier. Sizable increases also occurred in Thailand and Colombia. Indonesia, the world s largest producer, recorded a slowdown of production in Oct/Dec, contrary to a year earlier. This boosted world palm oil output to 67.5 Mn T in calendar year 2017, up an unprecedented 8.35 Mn T from the drought-reduced 59.1 Mn T in Malaysia produced 19.9 Mn T (vs. 17.3), Indonesia an estimated 36.5 Mn T (32.3), Thailand 2.45 (1.80) and Colombia 1.63 (1.14). Palm oil production exceeded consumption in the past three quarters, resulting in a significant increase in world palm oil stocks from only 9.1 Mn T at the beginning of April 2017 to 10.8 Mn T as of Oct 1, 2017 and to an estimated 12.1 Mn T as of early January At that level stocks were up 2.1 Mn T from a year ago but still trailing the record 13.5 Mn T registered as of early January Stocks will accumulate and palm oil prices should come under renewed pressure, unless bullish developments occur and spill over from other vegetable oils. World consumption of palm oil is expected to show a noticeable increase by about 3.0 Mn T during Oct/Sept 2017/18, thereof an estimated 2.2 Mn T in Asia. Increases of 0.5 Mn T are expected in Indonesian biodiesel production and by 0.2 Mn T in Malaysia. Food demand for palm oil is likely to rise by 0.3 Mn T each in India and China. Further increases in palm oil consumption is likely to occur in Bangladesh, Pakistan, Thailand, Vietnam, the Philippines, Iran and Japan. SOYA OIL We kept our estimate of global soya oil production in 2017/18 about unchanged at 55.5 Mn T with an increase from last year of 1.9 Mn T. The further development of soybean crops and of farmer selling as well as crushings are major variables to watch. Soya oil demand is seen increasing pronouncedly this season in Brazil and the US primarily to satisfy growing biodiesel production, but overall the increasingly ample supplies of palm oil are somewhat lessening the need to crush soybeans for oil, rather making meal demand the key determinant for the crush volume. In Oct/Dec 2017 the year-on-year decline of Argentine soya oil output by roughly 0.2 Mn T was more than PALM OIL : World Production ( Mn T ), Yields ( T/ha ) and Mature Area ( Mn ha ) P r o d u c t i o n Y i e l d s M a t u r e A r e a 2018F F F Indonesia 38.30* 36.50* 32.30* 33.50* 31.50* 3.83* 3.79* 3.53* 3.88* 3.87* 10.00* 9.63* 9.15* Malaysia 20.70* * 3.93* 3.51* 4.18* 4.26* 5.16* 5.07* 4.93* Thailand 2.28* 2.45* * 3.00* 2.34* 2.76* 2.78*.84*.82*.77* America 4.81* 4.76* * 3.30* * 1.44* 1.38 Africa 2.64* 2.55* * 1.68* * 1.51* 1.47 Oth ctrs. 1.38* 1.31* * 2.38* *.55*.53 WORLD 70.11* 67.49* * 3.55* * 19.02* The outlook for 2018 points to a further (though moderate) recovery in palm oil yields and on the back of increasing mature area another increase in production. Our current estimate of 70.1 Mn T is 2.6 Mn T above a year earlier. The growth will be relatively small, mainly because of the higher basis of comparison. Our tentative production forecasts are 38.3 Mn T for Indonesia and 20.7 Mn T for Malaysia. Setbacks in production are, however, expected to occur in Colombia and in Thailand. World supplies are likely to continue to grow sizably from a year earlier in coming months. There will be a seasonal slowing-down in palm oil production, but palm oil supplies are projected to be up 2.5 Mn T or 10% from a year earlier in Jan/March Promoted by favourable prices, palm oil consumption will continue to rise from a year earlier, probably reaching 16.7 Mn T this quarter (up 1.0 Mn T from a year earlier) compared with 16.6 Mn T in Oct/Dec (up 0.8 Mn T). With consumption exceeding production, stocks will decline but stay well up from last year in Malaysia, Indonesia and worldwide. For April/Sept 2018 we expect palm oil production to exceed consumption by approximately 2.3 Mn T. offset by increases in Brazil, the US, China and importing countries like Pakistan where soybean imports are on the rise. Taken together, world production increased by roughly 0.4 Mn T last quarter. The production growth is expected to remain similarly large this quarter and accelerate to 1.1 Mn T in April/Sept. We reduced our estimate of Argentine soya oil production to Mn T in Oct/Sept 2017/18, implying a stagnation. By the same token, our estimate of Argentine exports has been shaved off to Mn T in 2017/18, still a large increase of 0.5 Mn T from last season. Argentine exports declined by 0.4 Mn T in Oct/Dec 2017, partly curtailed by relatively large usage for biodiesel production. In the further course of this season soya oil is likely to regain market share from sunflower oil whose export supply pressure is diminishing. There are expectations that China will soon resume importing soya oil from Argentina but so far there is no confirmation that sales or exports have started. In the US soya oil consumption slowed down in December but increased by 5% on the year to a record 2.45 Mn T in Oct/Dec. In the full season we expect an increase of 0.4 Mn T or 4% to 9.4 Mn T, driven primarily by biodiesel production.

11 OIL WORLD No. 3, Vol. 61 Page 29 Jan 19, 2018 SOYA OIL : World Supply & Demand ( Mn T ) Apr / Sept Oct / March 2018F /18F 16/17 Opening stocks Production * * Thereof: U.S.A * * 5.23 Argentina * * 3.83 Brazil * * 3.78* Imports * * 5.42 India * 2.10* * 1.37* China....53* *.26 Exports * * 5.59 Thereof: U.S.A..35* *.67 Argentina * * 2.53 Brazil....73* *.43 Disappearance 28.08* * Ending stocks 5.73* Stocks/usage 10.2% 10.2% 9.9% 9.4% 9.7% SUNFLOWER OIL Lacklustre trading activity so far in 2018 has kept sun oil prices at the Black Sea export locations in a very narrow trading range and at a multi-year low level for this time of the year. At an estimated 2.9 Mn T in early 2018 world stocks of sun oil were still record high and up 0.4 Mn on the year. This reflects a seasonal build-up of inventories in the key sun oil producing countries (mainly Russia, Ukraine, the EU and Turkey) from 1.0 Mn T in early Oct to 1.5 Mn T as of end-dec and still unusually ample stocks in the rest of the world, which were unchanged from early Oct at the end of In the Oct/Dec quarter sun oil inventories declined in Argentina as well as in Iran and Iraq but presumably increased in China and the Republic of South Africa. decline by 13% in Jan/March from comparable The average monthly export volume is likely to shrink to 0.73 Mn T in Apr/Sept 2018 from 0.84 Mn T a year before and 0.86 Mn T in Oct/March 2017/18. The attractiveness of sun oil prices is expected to deteriorate in the further course of this season, in line with the prospective decline of production and export supplies in Russia and Ukraine, the key sources of sun oil for the world market. Also, the assumed further reductions of stocks in several major sun oil importing and consuming countries will be a price-supportive element to watch in coming months. We see some upward potential for sun oil prices in the Black Sea region primarily from March or April onward. We forecast world production of sun oil to decline by 7% in Apr/Sept 2018, while world consumption will probably contract by only 3% owing to the prospective record stocks primarily in the EU in early April and a seasonal recovery of Argentine sun oil inventories. RAPESEED OIL European prices of rapeseed oil were under substantial pressure in December and so far this month, falling even below those of soya oil. Price pressure stems from bigger than expected rapeseed supplies in Europe and worldwide as well as from stiff competition from large imports of Argentine biodiesel and palm oil for the production of biofuel. The latter curtailed EU rapeseed oil production below potential in recent months and also translated into relatively large European stocks of rapeseed oil according to our estimates. The somewhat bigger than expected global rapeseed supplies are reflected in the prospective growth of global rapeseed oil output by roughly 0.7 Mn T in Oct/Sept 2017/18. This partly reverses the steep decline of 1.6 Mn T registered in the past two seasons. The steep downtrend of rapeseed oil output in China seen in recent years may be reversed at least slightly this season. In India the uptrend of production should continue since the prospective decline of this year s Indian crop versus 2017 will be mitigated by relatively large stocks. Production of canola oil in the US declined by roughly 40 Thd T on the year in Jan/Dec 2017 and is expected to increase at best slightly in Oct/Sept 2017/18 despite the surprisingly large US crop since the further growing rapeseed oil consumption in the US is primarily satisfied by increasing imports from Canada. We expect world production of sun oil to decline by 2% on the year in Jan/March 2018 (the first year-onyear setback in two years). In this period world sun oil consumption is still likely to surpass the year-ago level by 1-2%, fuelled by the record opening stocks, the seasonal recovery in Argentine sun oil production and record output in the EU and Turkey. Sun oil exports from Argentina are likely to increase this quarter but because of the sharp reduction of shipments from Russia and Ukraine we forecast world sun oil exports to World imports of rapeseed oil increased by about 120 Thd T to a new high of 4.56 Mn T in Jan/Dec Indian imports decreased by 108 Thd T in calendar year 2017 but an uptrend was noted in the fourth quarter. The SEA recently lobbied for an increase of the Indian import duty on rapeseed oil from 25 to 30% to equal the duties on soya oil and palm oil and prevent pressure on domestic prices of rapeseed oil and rapeseed ahead of the upcoming domestic rapeseed crop. World consumption of rapeseed oil is estimated to decline by 0.6 Mn T this season mainly due to an assumed reduction of 1.1 Mn T in China, primarily caused by the pronounced reduction of stocks in recent years. The tight domestic supplies are seen lifting Chinese rapeseed oil imports above the year-ago level in the further course of this season. Continued on page 32

12 OIL WORLD No. 3, Vol. 61 Page 30 Jan 19, OILMEALS Developments in Argentina Currently in the Spotlight for Soya Meal Market Despite the assumed recovery of soybean crushings in Apr/Sept 2018, we consider it likely that Argentine soya meal production will decline from a year earlier in Oct/Sept 2017/18. Soya meal will probably have to finance a larger share of the crush value in World production of 8 major oilmeals is expected to reach a new high of Mn T in Oct/Sept 2017/18, up 3% on the year and compared with the increase of 5% registered in 2016/17. The primary reason for the slowdown in the growth is seen in the prospective setback of production of sun meal in Russia and Ukraine and of fish meal in Peru, although there is still significant uncertainty primarily with regard to the size of the fishing quota for Apr/July In the first few months of this season output and exports of sun meal from Russia and Ukraine were still close to the record year-earlier levels, but this has sharply reduced sunflowerseed stocks in the two countries and will result in setbacks of crushings in the remainder of 2017/18. World consumption of sun meal is therefore likely to decline on the year already this quarter and the reduction is seen accelerating in Apr/Sept This will require other oilmeals to fill the supply gap. We assume that the market s dependence will increase primarily on soya meal in coming months, also 8 OILMEALS: World Supply & Demand ( Mn T ) April / Sept Oct / March Grand total 2018F /18F 16/17 Op. stocks 9.62* Production * * Change +3.5% +5.3% -0.1% +3.3% +3.9% Imports 48.06* * Exports 48.27* * Consumption * * Change +3.9% +5.5% +1.1% +4.1% +2.9% End g stocks 10.78* * 8.78 Soya meal Op. stocks 7.57* Production * * Change +4.1% +5.0% +2.1% +3.4% +3.8% Imports 35.40* * Exports 35.89* * Consumption * * Change +4.6% +5.6% +3.2% +4.2% +2.8% End g stocks 8.78* * oth. meals Op. stocks 2.05* Production 45.98* * Change +1.8% +6.0% -5.6% +2.9% +4.4% Imports 12.66* * Exports 12.38* * Consumption 46.32* * Change +2.0% +5.0% -3.8% +3.8% +3.2% End g stocks 2.00* * 1.96 because of the pronounced slowdown of the growth in US supplies of distillers dried grains, which drove export prices at the US Gulf to multi-month highs in mid-jan This has contributed to the uptrend of soya meal prices lately, although the main reason is seen in recent developments in Argentina. SOYA MEAL Soya meal prices will stay volatile in coming weeks and be a function of soybean growing conditions in South America, primarily in Argentina, the world s largest soya meal exporter. Soybean farmer selling in Argentina fell short of expectations in Oct/Dec 2017 and stayed relatively subdued so far in 2018, curtailing soybean crushings, soya meal output and exports. Whether and under which conditions soybean sales to Argentine crushers will improve in coming months will (among many other factors) depend on the farmers financial situation and whether they can afford to postpone sales and possibly receive more owing to the gradual reduction of the soybean export tax, potential devaluation of the Argentine peso and the associated increase of domestic prices. In our opinion, Argentine farmers will prioritize selling of wheat and corn in coming months before switching to soybeans to cover production costs and other expenses in Still, we expect at least some improvement in the pace of Argentine soybean farmer selling in Apr/Sept 2018 compared with Oct/March 2017/18, supporting crushings and soya meal production. This will result in growing competition for soybean processors in the US, Brazil and elsewhere which have benefited from lower than expected Argentine crushings so far in 2017/18. US soybean crushings turned out higher than expected in the last 6-8 weeks of 2017 to satisfy increased export demand for soya meal. Still, world production of soya meal fell short of potential at 56.8 Mn T in Oct/Dec 2017, mainly because of a 0.8 Mn T decline in Argentina. World soya meal output will be seasonally low at an estimated 55.5 Mn T this quarter, although at least some pick-up in the year-on-year growth is expected. We forecast the increase in production to accelerate in Apr/Sept 2018 with 60 Mn T of soya meal produced on average of the two quarters. But it remains to be seen whether our assumption of more active Argentine farmer selling materializes. Under the lead of Brazil, China, the EU and the US world usage of soya meal exceeded production in the last quarter of 2017 but was still below potential. In many countries soya meal consumption even

13 OIL WORLD No. 3, Vol. 61 Page 31 Jan 19, 2018 declined in Oct/Dec due to the setback in imports. At an estimated 14.8 Mn T world exports of soya meal were below the year-earlier level, viz. by 0.2 Mn T, again in Oct/Dec In that period Argentine shipments plummeted by 0.8 Mn T, encouraging larger exports from other origins. We expect some recovery in world soya meal exports to 16.0 Mn T this quarter and a further increase to roughly 18 Mn T per quarter in April/Sept Still, further developments in Argentina have to be monitored closely since the capacity of other countries to offset insufficient Argentine soya meal shipments is rather limited. We have cut our forecast of world soya meal exports by 0.2 Mn to 66.6 Mn T in Oct/Sept 2017/18, still 2.0 Mn above the reduced level of 2016/17. At the same time, our estimate of world soya meal output has been left unchanged at Mn T. In many countries the assumed year-on-year increase of imports in the second half of 2017/18 will probably offset losses in Oct/March 2017/18, leading to an at least moderate growth of soya meal usage in the full season. Besides, we estimate soya meal consumption to continue to rise on the year in China, Brazil, the US and the EU in coming months. SUN MEAL The year-on-year decline of imports and usage of soya meal in some countries in recent months was beneficial for sun meal producers in Russia and Ukraine, keeping their exports close to the record yearearlier volume. In Oct/Dec 2017 increases in sun meal imports were registered in Egypt, Iran, Vietnam and a few other countries, all of which apparently consumed less soya meal than a year before. It is interesting to note, however, that most of the increase in world imports of sun meal in Oct/Dec 2017 was on account of the EU which also raised purchases of soya meal, signalling a recovery of oilmeal demand from the reduced 2016/17 level. Sun meal exports to Turkey are estimated to have virtually stagnated in the Oct/Dec quarter, while they declined noticeably to India and the Republic of South Africa. Consumers in the EU and elsewhere obviously took advantage of still attractive sun meal prices in recent months, driven by the seasonal growth of production and large opening stocks at several locations. However, mainly due to developments in Russia and Ukraine we expect world sun meal output to stagnate this quarter and to decline by 5% in Apr/Sept World exports of sun meal are forecast to fall short of the year-ago volume already in Jan/March, primarily due to the setback of production in Ukraine and ongoing strong demand for sun meal in Russia. We assume that the setback of shipments from the two key origins will accelerate in Apr/Sept RAPESEED MEAL World production of rapeseed meal fell short of potential in the first few months of 2017/18, primarily because of the lack of demand for rapeseed oil in the EU. Despite the record crop, output turned out lower than expected also in the US. US imports of canola meal declined on the year in Oct/Dec 2017, primarily offset by the sizable increase in soya meal off-take. This kept Canadian shipments to the US below potential. In contrast, exports to China continued to thrive, reaching the second highest monthly level in Nov and bringing the cumulation for the full quarter to an estimated 0.3 Mn T. At the same time, abundant rapeseed stocks in India still available in early Oct resulted in increased production and shipments of rapeseed meal to Bangladesh, Thailand and Vietnam in Oct/Dec For the full season we assume that larger exports from India and a recovery of exports from the CIS countries will account for most of the 0.3 Mn T increase in world rapeseed meal exports. Shipments from Canada and the UAE are likely to stagnate. India, Russia and Belarus are also expected to make up the bulk of the 2017/18 growth in world rapeseed meal production. The magnitude of the increase of world rapeseed meal consumption this season will primarily depend on the level of output in coming months. We estimate that usage increased by almost 3% in Oct/Dec 2017, led by India, China and the CIS countries, and our forecast for the full season is a recovery of 2-3% from the reduced 2016/17 level. FISH MEAL World fish meal prices rallied in Oct/Dec 2017, both in Peru and in major importing countries. In China, accounting for roughly one third of global consumption, fish meal prices (ex-port stocks) skyrocketed from RMB in early October to RMB in early December, driven by the fear of sharply below-normal Peruvian export supplies in Oct/Mar 2017/18. Peruvian prices joined the rally in early December after results of the exploratory fishing operation forced IMARPE to further delay the opening of the Nov/Jan season. Low stocks in early October and large forward sales of Peruvian producers for shipment in Dec/Mar 2017/18 reduced unsold supplies to a minimum. With no fishing until early January, Peruvian fish meal exports plummeted to the lowest level in more than 15 years at 25 Thd T in Oct/Dec 2017, reducing world exports to 0.5 Mn T (down 12% on the year) during the same period. Exports are likely to stay below the year-ago level again in Jan/Mar, with Peruvian production developments the biggest uncertainty to watch. Update Peru: Following five days of exploratory fishing, the Nov/Jan fishing season was finally opened on January 12. Average daily landings amounted to 32 Thd during Jan 7-17, bringing cumulative catches to 347 Thd T until Jan 17, equivalent to about 80 Thd T of fish meal and 7-9 Thd T of fish oil. The amount of catches taken per se suggests better than expected fish resources and correspondingly larger fish meal production until the end of the season in late January or early February. The high share of juvenile fish detected in the landings, however, is fuelling speculation of an early close of the season instead. Catch results in the 8 days to Jan 17 already forced IMARPE to impose several 3 to 5-day fishing bans in parts of the north/centre region.

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