Global Price Outlook for Palm & Lauric Oils and Impacts ... · 7 March 2018 ISTA Mielke GmbH, OIL WORLD, Hamburg - 1 Global Price Outlook for Palm & Lauric Oils and

7 March 2018 ISTA Mielke GmbH, OIL WORLD, Hamburg - 1

Global Price Outlook for Palm & Lauric Oils and Impacts from the Severe Argentine Drought Losses

Summary of key messages given by Thomas Mielke in his presentation at the Price Outlook Conference (POC) 2018, organized by Bursa Malaysia Derivatives together with CME Group in

Kuala Lumpur on 5-7 March 2018 The current Argentine drought is considered to be one of the worst in the past 50 years and has resulted in substantial damage to oilseed and grain crops as well as to the cattle industry. The drought further intensified in February and cumulative rainfall since December has been at or below 40% of normal in many agricultural areas. Our current Argentine soybean crop estimate is 42 Mn T, down 13 Mn T from a year earlier and down 18 Mn T from three years ago. The area is at a 9-year low and there is risk of additional acreage abandonment. At the moment it is considered possible that actual production turns out at or even below 40 Mn T. Some upward revision in Brazil close to last year’s record 114 Mn T is moderating the Argentine tightness. But production is also down sizably in Uruguay, Paraguay and Bolivia. The world soybean balance has tightened. The South American production failure will create a global production deficit in the world crop season 2017/18. Soybean stocks will decline by at least 2-3 Mn T contrary to earlier expectations of an increase. Soybean prices have appreciated noticeably and temporarily peaked at close to US-$ 10.70 per bushel in early March, up 11% within 9 weeks. Reduced South American supplies are raising the global dependence on US soybeans. It is considered likely that US soybean plantings this spring will be increased to a new high, but there is competition from cotton, spring wheat and, lately, more acreage competition also from corn. With the global dependence on US soybeans increasing for the remainder of 2018, any weather and production problems in the US Midwest would have an extraordinary bullish impact on prices of soybeans and products, primarily from July onward. Vegetable oil prices hardly responded to the Argentine drought losses, mainly because world supplies of palm oil are sufficiently large to offset the global production losses in soya oil caused by the reduced South American soybean production. In fact, soya oil futures declined and in the first week of March were down 5% from early January. Palm oil prices moved generally sideways throughout most of the first 9 weeks of this year, while rapeseed oil and lauric oil prices declined. Another bearish factor for vegetable oils so far in 2018 is to be seen in the drop in fossil fuel prices by 5% since January (expressed in US dollar terms). Soya meal prices are skyrocketing. They jumped by US-$ 100 or 30% on the world market since early January. The current and prospective shortfall in Argentine exports of soya meal can only partly be offset by the rest of the world. Higher prices will prevail until the required demand-

Daily indices from 2 Jan 2018 until 5 March 2018

Jan2 Jan16 Feb2 Feb13 Mar 590

95

100

105

110

115

120

1252 January 2018 = 100

CBOT: Daily Indices of Soybean Complex

Soybeans March 2018

Soya Meal March 2018

Soya Oil March 2018

7 March 2018 ISTA Mielke GmbH, OIL WORLD, Hamburg - 2 rationing is accomplished. The setback in soybean and soya meal prices this week is likely to be temporary. I consider it likely that soybean and meal prices will appreciate further in the next 2-4 weeks, setting new highs. The strong soya meal prices have boosted soybean crush margins. Soya oil has become the by-product and the soya oil share has fallen below 30%. PRICE OUTLOOK In the next 3-5 weeks I consider it likely that palm oil and soya oil prices will trade sideways or slightly higher. Soya oil is likely to widen the price premium over palm oil. Palm oil prices on the world market declined in the first week of March in response to the increase in Indian import duties with effect of March 2. There is going to be a global production deficit in palm oil which is likely to lead to a reduction of world palm oil stocks by 1.4-1.6 Mn T from early Jan until end-March 2018. The reduction of stocks should become price supportive for palm oil in the near term. Such a scenario is also supported by trade estimates about relatively weak palm oil production in Indonesia in early 2018. In April/Sept 2018 I expect some downward potential for palm oil prices. Crude palm oil, fob Indonesia, will probably fall to a low of around US-$ 600 but reach a price average of US-$ 630 for April/Sept 2018 compared with US-$ 650 for the average of Jan/March 2018. Soya oil (fob Argentina) is estimated at an average US-$ 750 for April/Sept 2018, with a price low of an estimated US-$ 710. In Rotterdam I forecast prices of crude palm oil at an average US-$ 655, soya oil $ 845 and rapeseed oil $ 820 for April/Sept 2018. The outlook for rapeseed oil is bearish. The biggest price decline is likely to occur in lauric oils. I consider it likely that the price lows will be reached sometime in the second half of this calendar year. In Rotterdam I expect a price low for palmkernel oil somewhere between US-$ 800 and 830 and for coconut oil a low around US-$ 920-950. World palm oil production is likely to reach 70.8 Mn T in calendar year 2018 compared with 67.9 Mn T in Jan/Dec 2017 and the sharply reduced volume of 59.2 Mn T in 2016. The current OIL WORLD forecast for Indonesia is 38.8 Mn T this year (vs. 36.8 last year) and for Malaysia 20.8 Mn T (vs. 19.9). At the beginning of January 2018 world stocks of palm oil were up 2.2 Mn T from a year ago. At the beginning of 2017, however, palm oil stocks were down steeply by 3.4 Mn T. Despite a slowdown of the production growth world palm oil supplies will still be ample this year according to our current forecasts. For April/Sept 2018 we expect a global production surplus of about 2.0-2.3 Mn T and a corresponding accumulation of stocks. World production of soya oil is set to rise only by 1.1 Mn T from a year earlier in Oct/Sept 2017/18 (against an increase of 2.2 Mn T in 2016/17). But the lower than expected production in soya oil is more than offset by the prospective increase in palm oil. Our price forecasts are based on the assumption that there will be no sizable appreciation of fossil fuel prices. In fact, for Brent and WTI we expect prices to trade generally sideways from now until September 2018. I would not be surprised if there would be some moderate weakening in response to large US production.

We will update our global supply, demand and price prospects for the individual oilseeds, oils & fats and oilmeals in the next OIL WORLD MONTHLY of March 16, 2018. Thomas Mielke (We invite you to contact us at [email protected] in case of questions or if you need any assistance from the OIL WORLD team.)

Thomas Mielke, for details www.oilworld.de POC 2018 in Kuala Lumpur on 7 March 2018

Source: ISTA Mielke GmbH, Oil World 1

Your Information Provider - - Independent, Unbiased, Authoritative - - Since 1958

March 7, 2018

Thomas Mielke, ISTA Mielke, Oil World,

Global Market Research on Oilseeds, Oils and Meals

Feel free to contact me for assistance at <[email protected]>

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 2018 in KL on 7 March 2018


March 7, 2018

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March 5, 2018

there somebody to pick me up tomorrow at the airport Price

Governments

Demand

Financial Markets& Funds

Weather

Supply

US Government: Trade policies- - > Escallatingretaliatory actions?

Drought in Argentinaandin the US

Currency values

Indian Government: Higher import taxes

Retaliation?


March 7, 2018

01/02 03/04

05/06 07/08

09/1011/12

13/1415/16

17/18F

048

1216202428323640444852566064

0

2

4

6

8

10

12

14

16INDIA: Oilseed Crops and Imports of Oils (Mn T)

Imports of Oils

Crops

On March 1 Indian

import taxes raised

again to 44% for crude

and 54% for ref. PO,

plus 10% surcharge !!

Will this help to reverse

- the negative trend in

domestic production?

- and the widening

supply gap?

Veg oil Imports 17/18:

Total 15.6 (vs 15.4)

Palm oil 9.50 vs. 9.37

Soya oil 3.50 vs. 3.47

Sunfl oil 2.25 vs. 2.14




March 7, 2018

Prices of palm oil under

pressure in Dec, falling to

US $ 618 (Dec 22).

Very strong demand has

kept prices well above

those of 2015. World PO

exports 49.4 Mn T (+5.5) in

Jan/Dec 2017.

Price recovered slightly in

Jan and Febr 2018, which

was not unexpected.

Bearish immediate

response at the BMD on

Indian duty hike

The outlook on palm oil

prices in 2018 follow later

Oct Nov Dec Jan Feb Mar Apr May Jun Jly Aug Sep

450

500

550

600

650

700

750

800Monthly averages until February 2018

Monthly Prices Crude Palm Oil, fob Indonesia (US-$/ T)

2015/16

2016/17

2017/18


March 7, 2018

94/95 97/98 00/01 03/04 06/07 09/10 13/14 17/18F

11,21,41,61,8

22,22,42,62,8

33,23,4

in Key Countries in Tonnes per Ha

Yields of Soybeans, Rapeseed & Sunfl.seed

Sunfl.seed

Soybeans

Rapeseed

Yield Increases in

the past 15 years:

Soybeans +18%

Rapeseed +26%

Sunflowerseed +53%

(a) Berechnet mit 3-Jahres-Durchschnitten.




March 7, 2018

Soybean Field in Argentina on March 1 (Pergamino – North B. Aires)

Severe Drought in Argentina


March 7, 2018

19911992

19931994

19951996

19971998

19992000

20012002

20032004

20052006

20072008

20092010

20112012

20132014

20152016

20172018

0

10

20

30

40

50

60ARGENTINA: Soybean Area and Output

Production (Mn T)

Harvested Area (Mn ha)

9-year low




March 7, 2018

ARGENTINA: Soybean Area ( Mn ha ), Yields (T/ha) & Production (Mn T)

2018F 2017 2016 2015 2012 2009 Planted area 17.75* 19.10* 20.30* 19.90* 18.67 17.50*

Lost area .75* 1.20* 1.50* .40* 1.09 1.00*

Harvest area 17.00* 17.90* 18.80* 19.50* 17.58 16.50* Yields (T/ha) 2.47* 3.05* 2.89* 3.08* 2.26* 1.91*

Production . . . 42.00* 54.60* 54.40* 60.00* 39.80* 31.50*

ARGENTINA: Soybean Area ( Mn ha ), Yields (T/ha) & Production (Mn T)

2018F 2017 2016 2015 2012 2009 Planted area 17.75* 19.10* 20.30* 19.90* 18.67 17.50*

Lost area .75* 1.20* 1.50* .40* 1.09 1.00*

Harvest area 17.00* 17.90* 18.80* 19.50* 17.58 16.50* Yields (T/ha) 2.47* 3.05* 2.89* 3.08* 2.26* 1.91*

Production . . . 42.00* 54.60* 54.40* 60.00* 39.80* 31.50*


March 7, 2018

Precipitation Forecast March 7-13, 2018 – South America




March 7, 2018

Precipitation Forecast March 6-22, 2018 – South America


March 7, 2018

SOUTH AMERICA : Soybean Production (Mn T)March 2 Dec 22

17/18F 17/18F 16/17 15/16 14/15 Brazil . . . . . 113.00* 109.50* 114.08 95.43 97.18 Argentina. . 42.00* 53.50* 54.60* 54.40* 60.00*Paraguay. . 9.40* 9.75* 10.05* 9.40* 8.40*Bolivia . . . . 2.20* 2.65* 2.70* 2.90* 2.65 Uruguay. . . 2.50* 3.30* 3.40* 2.48* 3.40*Total . . . . . 169.10* 178.70* 184.83 164.61 171.63 Total . . . . . 178.70* 164.61 171.63

SOUTH AMERICA : Soybean Production (Mn T)March 2 Dec 22

17/18F 17/18F 16/17 15/16 14/15 Brazil . . . . . 113.00* 109.50* 114.08 95.43 97.18 Argentina. . 42.00* 53.50* 54.60* 54.40* 60.00*Paraguay. . 9.40* 9.75* 10.05* 9.40* 8.40*Bolivia . . . . 2.20* 2.65* 2.70* 2.90* 2.65 Uruguay. . . 2.50* 3.30* 3.40* 2.48* 3.40*Total . . . . . 169.10* 178.70* 184.83 164.61 171.63 Total . . . . . 178.70* 164.61 171.63

Drop of 15.7 Mn T




March 7, 2018

SOYBEANS : World Supply and Demand ( Mn T )17/18F 16/17 15/16 14/15

Opening stocks 94.86 77.90 83.39 62.59

Production 338.64* 347.98 310.88 320.01 U.S.A. . . . . . . . . 119.52 116.92 106.86 106.88 China, P.R. . . . . 16.66 11.71 10.69 12.15 India. . . . . . . . . . 8.00* 10.50* 7.10* 8.50*

Argentina . . . . . . 42.00* 54.60* 54.40* 60.00* Brazil . . . . . . . . . 113.00* 114.08 95.43 97.18

Total supply 433.50* 425.88 394.27 382.60

Crush (Sept/Aug) . 293.00* 285.80 273.78 258.77

Other use . . . . . . . 47.90* 45.22 42.59 40.44

Ending stocks 92.60* 94.86 77.90 83.39 U.S.A. Aug 31 13.60* 8.21 5.35 5.19 Argentina Aug 31 27.00* 30.68* 28.60* 30.96* Brazil Aug 31 27.00* 30.06* 19.96* 24.10*

Stocks/usage 27.2% 28.7% 24.6% 27.9%

SOYBEANS : World Supply and Demand ( Mn T )17/18F 16/17 15/16 14/15

Opening stocks 94.86 77.90 83.39 62.59

Production 338.64* 347.98 310.88 320.01 U.S.A. . . . . . . . . 119.52 116.92 106.86 106.88 China, P.R. . . . . 16.66 11.71 10.69 12.15 India. . . . . . . . . . 8.00* 10.50* 7.10* 8.50*

Argentina . . . . . . 42.00* 54.60* 54.40* 60.00* Brazil . . . . . . . . . 113.00* 114.08 95.43 97.18

Total supply 433.50* 425.88 394.27 382.60

Crush (Sept/Aug) . 293.00* 285.80 273.78 258.77

Other use . . . . . . . 47.90* 45.22 42.59 40.44

Ending stocks 92.60* 94.86 77.90 83.39 U.S.A. Aug 31 13.60* 8.21 5.35 5.19 Argentina Aug 31 27.00* 30.68* 28.60* 30.96* Brazil Aug 31 27.00* 30.06* 19.96* 24.10*

Stocks/usage 27.2% 28.7% 24.6% 27.9%

Total soybean

consumption seen

rising to 341 Mn T

in 17/18.

Ending stocks to

decline by 2-3 Mn.

Global soybean

output in 2017/18

turning out

considerably

below potential.


March 7, 2018

1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018F0

10

20

30

40

50

60

70

80

90

100Soybeans: W orld Sto cks as o f end -Au gu st (Mn T )

In 2017/18 there will be

a global soybean

production deficit,

caused by the South

American crop losses.

There are still weather

and productioin risks.

At the moment we

forecast that stocks will

be down by 2-3 Mn T as

of end-Aug 2018.

Swing factors to watch:

1) Farmer selling

2) The crush economics

3)Chinese buying

(timing and size)




March 7, 2018

O c t o b e r / S e p t e m b e r95/96

96/9797/98

98/9999/00

00/01 01/02

02/03 03/04

04/05 05/06

06/07 07/08

08/09 09/10

10/11 11/12

12/1313/14

14/1515/16

16/1717/18

0

10

20

30

40

50

60

70

80

90

100China

Rest of world

Imports of Soybeans (Mn T)

99/00 02/03 05/06 08/09 11/12 14/15 17/18F20

30

40

50

60

70

80

90

100

110

120Production (Mn T)Crushings (Mn T)

CHINA: Oilseed Output & Crushings

China imports likely to be boosted to

96 Mn T in 2017/18.

Soybean imports of all countries

other than China jumped from 38.2

Mn T in 2012/13 and may reach 55.2

Mn T this season.


March 7, 2018

01/02 02/03

03/04 04/05

05/06 06/07

07/08 08/09

09/10 10/11

11/12 12/13

13/1414/15

15/1616/17

17/18F

0

2

4

6

8

10

12Soya oilPalm oilOthers

CHINA: Imports of 17 Oils & Fats (Mn T)

Oil/Fat Imports 17/18:

Total 9.1 (vs 8.7)

Palm oil 5.5 vs. 5.0

Soya oil 0.5 vs. 0.7

Sunfl oil 0.8 vs. 0.7

Rape oil 0.8 vs. 0.8




March 7, 2018

O c t o b e r / S e p t e m b e r

99/00 02/03 05/06 08/09 11/12 14/15 17/18F0

1020

30

40

50

6070

8090

Total Oilmeals

Soya Meal

& Growing Importance of Soya Meal (Mn T)

CHINA: Total Oilmeal ConsumptionFeed usage up 3% in

2016/17

Soya meal consumption

jumped by 11% in

2016/17,

benefitting from the

steep reduction of

imports of DDGS

Further sizeable increase

in Chinese soya meal

demand in 2017/18,

partly due to high prices

of corn in China


March 7, 2018

Daily futures from 3 Jan 2017 until 5 March 2018

Ja17 Mar May Jly Sept Nov Ja18 Mar

320340360380400420440460480500520

Dalian CBOT

spot position -- in US-$/T

Daily Soya Meal Futures (Dalian vs. CBOT)




March 7, 2018

Daily price ratios from 3 Jan 2017 until 5 March 2018

Ja17 Mar May Jly Sept Nov Ja18 Mar

14001600180020002200240026002800300032003400

Soya meal

Corn

Dalian Exchange -- spot position

Daily Soya Meal & Corn Futures PricesChina increasing

exports of soya meal

in coming months.

In Oct/Sept exports

1.7-2.0 Mn T (vs 1.1)


March 7, 2018

75/76 81/82 87/88 93/94 99/00 04/05 10/11 17/18F0

20

40

60

80

100

120

140

160

180Soybean Crop Trend Since 74/75 (Mn T)

U.S.A.

Argentina, B razil & Paraguay

S. American

soybean crop to

plunge in early

2018

(our current

estimate is for a

drop of 16 Mn T)

It could get worse.

Arrival of needed

rains not forecast.

Uncertainties

Increasing

dependence on

new US soya crop




March 7, 2018

99/00 01/02 03/04 05/06 07/08 09/10 11/12 13/14 15/16 17/18F10012014016018020022024026028030032034036010 Oilseeds: World Production (Mn T)

Soybeans

Other 9 oilseeds

World soybean

production to drop by

9 Mn T in 2017/18

Soybean production

currently estimated to

be 2-3 Mn T below

projected consump-

tion in 2017/18

Production of 9 other

oilseeds +8 Mn T

Sunfl.seed -1.6

Rapeseed +3.1

Cottonseed +4.2


March 7, 2018

Daily indices f rom 2 Jan 2018 until 5 March 2018

Jan2 Jan16 Feb2 Feb13 Mar 590

95

100

105

110

115

120

1252 J anuary 2018 = 100

CBOT: Dai ly Indices o f Soybean Comp lex

Soybeans M arch 2018

Soya Meal March 2018

Soya Oil March 2018

Price Impacts of the Production Losses in Argentina




March 7, 2018

Daily prices from 3 Jan 2017 until 5 March 2018

Ja17FebMar AprMay Jun Jly Aug Sept Oct Nov Dec Ja18 Mar320330340350360370380390400410420430440

Soybeans

Soya meal

CBOT: Daily Spot Futures Soybeans & Soya Meal (US-$ /T)


March 7, 2018

Soybeans Soya oil 8 Oils Soya meal 8 Meals0

10

20

30

40

50

60World Exports in Jan/Dec 2017

Argentine Exports in Percent of

%

5%

45%

7%

48%

35%




March 7, 2018

Prices from 1 Oct 2014 until 1 March 2018Oct Nov Dec Jan Feb Mar Apr May Jun Jly Aug Sep

250

300

350

400

450

500Weekly Prices of Soya Pellets, 47% Arg., fob (US-$/ T)

2014/15

2016/17

2015/16

2017/18


March 7, 2018

O c t o b e r / S e p t e m b e r 03/04 05/06 07/08 09/10 11/12 13/14 15/16 17/18F

70

90

110

130

150

170

190

210

230

250

12 Oilmeals: World Production (Mn T)

Soyameal

Other 11 oilmeals

Strong demand increase

for oilmeals from the

livestock industry has

boosted world

production of oilmeals

by 150% in 25 years

Global dependence of

soya meal increasing

Declining supplies

of fish meal and of

sunflower meal in

2017/18




March 7, 2018

2009 2012 2018

Jan2 to June 30 Jan 3 to June 29 Jan 2 to March 1-10

-505

1015202530354045505560

Soya meal, fob Arg.Soybeans, US, cif Rott.Soya oil, Arg. fob

Palm oil, fob Mal.

PRICE RESPONSES to Argentine Droughts

%

%

+27%

+52%

+30%


March 7, 2018

2009 2012 2018Jan2 to June 30 Jan 3 to June 29 Jan 2 to March 1

-20-15-10-505

1015202530354045505560 Soya meal, f ob Arg.

Soyb ean s, US, cif Rot t.

Soya oil, Arg. f ob

Palm oil, fob Mal.

Min eral oil (Bren t)

PRICE RESPONSES to Argentine Droughts%

%

+27%

+52%

+30%




March 7, 2018

Monthly prices from Jan 2016 until Febr 2018Ja16 Mar May Jly Sep Nov Ja17 Mar May Jly Sep Nov Ja18

0

100

200

300

400

500

600

700

800

900

0

150

300

450

600

750

900

1050

1200

1350Monthly Prices of Palm Oil & Crude Mineral Oil (US- $/T)

Palm oil, crude, Rott.

Premium palm oil vs crude oil

Crude mineral oil, Brent


March 7, 2018

BIODIESELand HVO: World Production ( Mn T ) J a n u a r y / D e c e m b e r

2017 2016 2015 2014 2013 EU-28 . . . . . 12.90* 12.61 12.41 12.29 10.71 U.S.A. . . . . . 6.10 6.21 4.72 4.80 4.77 Argentina . . . 2.80* 2.66 1.81 2.58 2.00 Brazil . . . . . . 3.75 3.33 3.46 3.00 2.56 Colombia . . . .53* .51 .51 .52 .50 Singapore . . 1.05* .99 .87 .80 .81 Indonesia. . . 2.95* 3.18* 1.22 2.92 2.60 Malaysia . . . .72 .51 .67 .60 .47 Thailand. . . . 1.33* 1.16* 1.14 1.04 .94 Oth. ctries. . . 3.06* 2.95* 2.89* 2.94* 2.65*Total . . . . . . 35.19* 34.13 29.70 31.49 28.01

Change in ( Mn T )

+1.06* 4.43 -1.79 +3.48 +3.33

Source: ISTA Mielke, Feb 2018 – www.oilworld.de




March 7, 2018

The Outlook for Palm Oil

Many challenges:

- Lack of replanting (age profile)

- Labour shortage (Malaysia)

- Below potential yields

- Acreage limitations (slow down

in new plantings)

The strong recovery in world

palm oil production in 2017 and

2018 is temporary. From 2019

onward there will be smaller

annual increases in palm oil

production and supplies.


March 7, 2018

19801982

19841986

19881990

19921994

19961998

20002002

20042006

20082010

20122014

20162018

0

10

20

30

40

50

60

70

80Malaysia

Indonesia

Rest of World

in Major Countries (Mn T)

Palm Oil Production 1980 - 2018

Effects of El Nino

2016:

-6% = -3.7 Mn T

1998:

-5% = -0.8 Mn T




March 7, 2018

Supply & Demand of 17 oils & fats:

Current veg oil supplies are large.

World stocks up 2 Mn from last year

Production of vegetable oils and

animal fats increased by 15.2 Mn T

from a year ago in Jan/Dec 2017.

The global situation changed from

deficit in 2016 to surplus in 2017.

Part of the surplus was used to

replenish stocks.

J a n / D e c

17 Oils/Fats: 2017 2016

--------------- ------ ------

Production 221.1 (+15.2) 205.9

Consumption 219.0 (+7.3) 211.7

Surplus/Deficit +2.1 Mn T -5.8


450

500

550

600

650

700

750



2015/16

2016/17

2017/18


March 7, 2018

Looking on Palm Oil alone:

World palm oil output jumped by 8.6

Mn T from last year in Jan/Dec 2017.

Also the PO situation changed from


But prices did not collapse in 2017.

Part of the surplus was needed to

replenish depleted stocks.

J a n / D e c

Palm Oil (Mn T ) 2017 2016

--------------- ------ ------

Production 67.8 (+8.6) 59.2

Consumption 65.4 (+2.6) 62.8


Supply & Demand of 17 oils & fats:

Current veg oil supplies are large.

World stocks up 2 Mn from last year

Production of vegetable oils and

animal fats increased by 15.2 Mn T

from a year ago in Jan/Dec 2017.

The global situation changed from


Part of the surplus was used to

replenish stocks.

J a n / D e c

17 Oils/Fats: 2017 2016

--------------- ------ ------

Production 221.1 (+15.2) 205.9

Consumption 219.0 (+7.3) 211.7





March 7, 2018

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

2018F 2017 2016 2015 2018F 2017 2016 2015 Indonesia 38.80* 36.80* 32.40* 33.53* 3.87* 3.81* 3.54* 3.89*Malaysia 20.76* 19.92 17.32 19.96 4.02* 3.93* 3.51* 4.18*Thailand 2.45* 2.58* 1.80 2.07 2.92* 3.15* 2.34* 2.76*America 4.80* 4.71* 4.04 3.83 3.17* 3.26* 2.93 2.99

Africa 2.65* 2.55* 2.44 2.38 1.70* 1.68* 1.65 1.66 Oth ctrs. 1.38* 1.31* 1.23 1.17 2.46* 2.38* 2.32 2.28 WORLD 70.84* 67.87* 59.23 62.94 3.60* 3.56* 3.25 3.62

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

2018F 2017 2016 2015 2018F 2017 2016 2015 Indonesia 38.80* 36.80* 32.40* 33.53* 3.87* 3.81* 3.54* 3.89*Malaysia 20.76* 19.92 17.32 19.96 4.02* 3.93* 3.51* 4.18*Thailand 2.45* 2.58* 1.80 2.07 2.92* 3.15* 2.34* 2.76*America 4.80* 4.71* 4.04 3.83 3.17* 3.26* 2.93 2.99

Africa 2.65* 2.55* 2.44 2.38 1.70* 1.68* 1.65 1.66 Oth ctrs. 1.38* 1.31* 1.23 1.17 2.46* 2.38* 2.32 2.28 WORLD 70.84* 67.87* 59.23 62.94 3.60* 3.56* 3.25 3.62

Bullish or bearish?

+3.0 Mn T +8.6 Mn T


March 7, 2018

PALM OIL : World Production ( Mn T ) and Yields ( T/ha ) )P r o d u c t i o n

2018F 2017 2016 2015 Indonesia 38.80* 36.80* 32.40* 33.53*Malaysia 20.76* 19.92 17.32 19.96 Thailand 2.45* 2.58* 1.80 2.07 America 4.80* 4.71* 4.04 3.83

Africa 2.65* 2.55* 2.44 2.38 Oth ctrs. 1.38* 1.31* 1.23 1.17 WORLD 70.84* 67.87* 59.23 62.94

PALM OIL : World Production ( Mn T ) and Yields ( T/ha ) )P r o d u c t i o n

2018F 2017 2016 2015 Indonesia 38.80* 36.80* 32.40* 33.53*Malaysia 20.76* 19.92 17.32 19.96 Thailand 2.45* 2.58* 1.80 2.07 America 4.80* 4.71* 4.04 3.83

Africa 2.65* 2.55* 2.44 2.38 Oth ctrs. 1.38* 1.31* 1.23 1.17 WORLD 70.84* 67.87* 59.23 62.94

+3.0 Mn T +8.6 Mn T

My expectation is that world palm

oil supplies will be comfortably

large in Jan/Sep 2018:

J a n / Sept

Palm Oil (Mn T ) 2018 2017

-------------------- ------ ------

Opening stocks +2.2 -3.4

Production +2.6 +6.9

World Supplies +4.8 +3.5

Consumption +3.7

Palm oil stocks -1.6 Mn T in Jan/Mar 18

but +2.2 Mn T in Apr/Sept 2018




March 7, 2018

What is the Price Outlook ?

The growth in world production is slowing down.

What are the effects on stocks and prices?

O c t / S e p t

Production of 17/18 16/17

--------------- -------- --------

17 oils & fats +7.7 +13.6

Of which:

Palm oil +4.4 +7.6

2 Lauric oils +0.8 +0.5

Soya oil +1.1 +2.2

Rape/canola oil +0.7 -0.3

Sunflower oil -0.6 +2.9

Grd+cotton oils +0.4 +0.6

Other oils/fats +0.9 +0.1


March 7, 2018

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 13/14Op'g stocks . . . . 27.10 26.71 31.86 30.12 27.58

Production . . . . 225.70* 218.03 204.39 206.03 201.56 Change . . . . . +7.67 +13.64 -1.64 +4.47 +11.47

Imports . . . . . . . . 87.39* 86.23 81.75 81.11 76.58Exports. . . . . . . . 87.61* 86.96 80.99 82.09 76.81

Consumption . . 223.15* 216.91 210.30 203.32 198.79 Change . . . . . +6.24 +6.61 +6.98 +4.53 +9.10

End stocks . . . . 29.42* 27.10 26.71 31.86 30.12

Stocks/usage . . . 13.2% 12.5% 12.7% 15.7% 15.2%




March 7, 2018

89/90

92/93

95/96

98/99

01/02

04/05

07/08

10/11

13/14

16/17

020406080

100120140160180200220240

biofuel food and other

Total Usage in Mn T

17 Oils & Fats : World Consumption

Average demand growth in

past 5 seasons:

Total per year +6.5 Mn T

Biofuel +1.7 Mn T

Food/other +4.8 Mn T

Rapidly Rising World

Demand of Oils & Fats


March 7, 2018

At the end of the season

2004 2006 2008 2010 2012 2014 2016 2018F8

10

12

14

16

18

20

22

17 oils & fats

10 oilseeds

World Stocks in Percent of Annual Usage (%)

Production deficit of soybeans

in 2017/18 cannot be offset by

other oilseeds.

Extent of the decline in South

America still unclear.

Oilseed stocks still sufficient

but increased dependence on

US soybeans in 2018.

World stocks of oils & fats have

increased, but are not

burdensome

We forecast a recovery of oils &

fats stocks by 2.3-2.5 Mn T in

2017/18




March 7, 2018

Prices from 1 Nov 2016 until 5 March 2018Nov Dec Jan Feb Mar Apr May Jun Jly Aug Sep Oct Nov Dec Ja18 Feb

2200

2300

2400

2500

2600

2700

2800

2900

3000

3100

3200

3300Third position in Malaysian Ringgit/T

MALAYSIA: Crude Palm Oil Futures Close


March 7, 2018

Prices of palm oil and soy oil likely to

trade sideways or slightly higher in

the next 3-5 weeks.

But a new price weakness likely to

emerge from Apr 2018 onward

Average Apr/Sept 2018:

Crude palmoil (Indon.) 630 (low 600)

Soya oil (fob Arg.) 750 (low 710)

Sunfl oil (fob Ukraine) 780

Crude palm oil (Rott) 655 (low 625)

Dutch soya oil 845

Dutch Rape oil 820


450

500

550

600

650

700

750



2015/16

2016/17

2017/18




March 7, 2018

Sizeably rising stocks in 2018. - - > Narrowing of price premiums likely

World Output of the 2 Lauric Oils +0.8 Mn T in 2017/18 (against +0.54 in 16/17)

Prices of Lauric Oils are seen declining in 2018

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 14/15Op'g stocks . .33 .34 .42 .36Production . . 2.75* 2.48 2.59 2.97 Change . . . . +.27 -.11 -.38 -.08Imports . . . . . 1.82* 1.62 1.65 1.95Exports . . . . . 1.81* 1.67 1.64 1.96Disappear.(a) 2.67* 2.44 2.68 2.89 Change . . . . +.23 -.24 -.21 -.23End. stocks . . .42* .33 .34 .42

(a)Residual of the balance.

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 14/15Op'g stocks . .33 .34 .42 .36Production . . 2.75* 2.48 2.59 2.97 Change . . . . +.27 -.11 -.38 -.08Imports . . . . . 1.82* 1.62 1.65 1.95Exports . . . . . 1.81* 1.67 1.64 1.96Disappear.(a) 2.67* 2.44 2.68 2.89 Change . . . . +.23 -.24 -.21 -.23End. stocks . . .42* .33 .34 .42

(a)Residual of the balance.

Palmkernel Oil : World Supply & Demand(Mn T)

O c t o b e r / S e p t e m b e r17/18F 16/17 15/16 14/15

Op'g stocks . .87 .77 1.03 1.00Production . . 7.59* 7.05 6.40 6.79 Change. . . . . +.54 +.65 -.39 +.25Imports . . . . . 3.36* 3.15 3.12 3.31Exports . . . . . 3.38* 3.14 3.12 3.33Disappear.(a) 7.33* 6.97 6.67 6.74 Change. . . . . +.36 +.30 -.07 +.34End. stocks . . 1.11* .87 .77 1.03

Palmkernel Oil : World Supply & Demand(Mn T)

O c t o b e r / S e p t e m b e r17/18F 16/17 15/16 14/15

Op'g stocks . .87 .77 1.03 1.00Production . . 7.59* 7.05 6.40 6.79 Change. . . . . +.54 +.65 -.39 +.25Imports . . . . . 3.36* 3.15 3.12 3.31Exports . . . . . 3.38* 3.14 3.12 3.33Disappear.(a) 7.33* 6.97 6.67 6.74 Change. . . . . +.36 +.30 -.07 +.34End. stocks . . 1.11* .87 .77 1.03


March 7, 2018

Daily prices from July 2014 until 5 March 2018Jly14 Sep NovJan15 Mar May Jly Sep Nov Ja16 Mar May Jly Sep Nov Ja'17 Mar May Jly Sep DecJa18 Mar

400500600700800900

10001100120013001400150016001700180019002000

Coconut oil,Phil/Indo,cif Rott

Palmkern oil, Mal./Indo., cif Rott.

Palm oil crude, cif N.W. Eur

Daily Prices of 3 Oils in Rotterdam (US-$/T)




March 7, 2018

January 2013 until February 2018'13 '14 '15 '16 '17 '18

100250400550700850

10001150130014501600175019002050220023502500

Palm oil, crude cif Rott.

Palmkernel oil, Mal/Indo., cif Rott.

Coconut oil, Phil/Indo. cif Rott.

Monthly Prices of Palm & Lauric Oils (in US-$/T)Price Outlook

Average July/Dec 2018:

Palmkernel oil (Rott) 900

(Price low 830 or 800)

Coconut oil (Rott) avg 1000

(Price low 950 or 920)


March 7, 2018

Thank you for your attention!

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Documents

Global Price Outlook for Palm & Lauric Oils and Impacts ... · 7 March 2018 ISTA Mielke GmbH, OIL WORLD, Hamburg - 1 Global Price Outlook for Palm & Lauric Oils and