Global Supply, Demand & Price Outlook of Oils & Fatsniop.org/wp-content/uploads/2015/03/Final-NIOP-Presentation-Th... · Global Supply, Demand & Price Outlook ... Daily Prices of

13 March 2015

Your Information Provider - - Independent, Unbiased, Authoritative - - Since 1958 © www.oilworld.de

there somebody to pick me up tomorrow at

the airport

Global Supply, Demand & Price Outlook of Oils & Fats

Presentation at the 81st Annual Convention of NIOP on March 16, 2015

Thomas Mielke, Executive Director of ISTA Mielke, Oil World,

Global Market Research on Oilseeds, Oils and Meals,

E-mail <[email protected]>

13 March 2015



the airport

� 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 quarterly world supply and demand balances

� Daily, weekly and monthly publications on www.oilworld.de

� We are now also offering a Chinese OIL WORLD in Mandarin.

� We would like to be YOUR service provider. Take 1st-hand information from us, because we generate & analyze the global data

Company Profil and Services

13 March 2015


13 March 2015


January 1998 until mid-March 2015

'98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15100250400550700850

10001150130014501600175019002050 SBO Du tch

Sun oil EU

Rape oil D utch

CPO cif R'd am

Monthly Prices of 4 Oils (in US-$/T)Veg oil prices havefallen to 5-year lows

may have bottomed in early Febr 2015

Palm oil discounts vs Arg soya oil narrowedfor the new crop.Is that sustainable?

Financial uncertainties

Economic crisis in China and oth ctries

13 March 2015


In the short and medium term, palm oil can hardly react to declining prices

But producers of sun oil and rape oil have done that (farmers and crushers resonding)

Supply response

Tug-of-war between the bearish demand and the bullish supply fundamentalsJanuary 1998 until mid-March 2015

'98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15100250400550700850

10001150130014501600175019002050 SBO Du tch

Sun oil EU

Rape oil D utch

CPO cif R'd am

Monthly Prices of 4 Oils (in US-$/T)

13 March 2015



the airport

95/9697/98

99/00 01/02

03/04 05/06

07/08 09/10

11/1213/14

15/16F

15

202530

3540

455055

6065

70

World Production (MnT) and Area (Mn ha)

RAPESEED & CANOLA

Production

Area

Farmers have reacted, cutting back plantings of high yielding oilseed

For example rapeseed in EU, Ukraine & India

And probably also in Canada this spring

World production of rapeseed to decline by 2-3 Mn T in 2015/16

13 March 2015


Bearishness emanating from the energy sector

Daily futures from 2 Jan 2014 until 12 Mar 2015

Ja14Feb Mar Apr May Jun Jly AugSep Oct NovDec Ja15 FebMar

40

50

60

70

80

90

100

110

120

First position in US-$ per barrel

Brent (ICE): Daily Futures of Crude Mineral Oil

Daily prices from January 2014 unti l 11 Mar 2015

Ja14 Feb Mar Apr May Jun Jly Aug Sep Oct Nov Dec Ja15 MarMar

450

500

550

600

650

700

750

800

850

900

950

1000

1050

ICE Gas Oil (spot)

Crude palm oil, cif R'dam

Daily Prices of Gas Oil & Crude Palm Oil (US-$/T)

13 March 2015


The graph shows theboost in production ofbiodiesel since 2004

In 2014 productionexceeded expectationsand rose 2.4 Mn T to29.8 Mn T

Decline of 0.8-1.0 Mn in 2015 - - > for first time !

Plus reductions of oils& fats use for electricityproduction

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015F

0

5

10

15

20

25

30

World Production of Biodiesel (Mn T)

13 March 2015


2011 2012 2013 2014 2015 F

EU-28 9.3 9.6 10.3 11.4 10.7

USA 3.2 3.3 4.5 4.1 4.1

Argentina 2.4 2.5 2.0 2.6 2.0

Brazil 2.4 2.4 2.6 3.0 3.5

Indonesia 1.4 1.9 2.6 2.9 3.1

Others 3.8 4.6 5.4 5.8 5.5

Total 22.5 24.3 27.4 29.8 28.9

Biodiesel Production (Mn T)In 2014: Palm oil usage in biodiesel 9.7 Mn T (32% of all feedstock used) and 16% of world PO usage

Soya oil 8.1 Mn T and 18% of total soya oil use

Rapeseed oil 6.4 and 24%

13 March 2015


2011 2012 2013 2014 2015 F

EU-28 9.3 9.6 10.3 11.4 10.7

USA 3.2 3.3 4.5 4.1 4.1

Argentina 2.4 2.5 2.0 2.6 2.0

Brazil 2.4 2.4 2.6 3.0 3.5

Indonesia 1.4 1.9 2.6 2.9 3.1

Others 3.8 4.6 5.4 5.8 5.5

Total 22.5 24.3 27.4 29.8 28.9

Biodiesel Production (Mn T)

Indonesia is the majorswing factor to bewatched in 2015

Last Friday new propsalreleased to raise domesticbiodiesel to B15 !

13 March 2015


1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

0

20

40

60

80

100Soybeans: World Stocks as of end-August (Mn T)

World stocks ofsoybeans likely to rise toa record 90 Mn T at theend of 2014/15 season

Are we at the beginningof a longer period ofsurplus stocks anddepressed prices?

Still, world soybeancrushings could not beraised sufficiently

13 March 2015



the airport

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

0

1

2

3

4

5

6

7

8

ARGENTINA: Soybean Stocks (Mn T)

Stocks as of March 1

Daily selling prices from 2 July 2013 until 11 March 2015

Jly Sep Dec Mar May Jly Oct Mar

4

6

8

10

12

14

16

Inofficial exchange rate

Official exchange rate

Daily Selling Prices of Argentine Peso per 1 US-$

13 March 2015



the airport

In my opinion we have seen the lows for soya oil futures. Soybeanssupported by lack of farmer selling and, late Febr, by the Brazilian strike

Daily futures from 2 June 2014 until 12 March 2015Jun14 Jly Aug Sep Oct Nov Dec Ja15 Feb Mar

900

950

1000

1050

1100

1150

1200

1250

1300

May 2015 position

50-day moving average

CBOT: Daily Soybean Futures (c/bu)


25

30

35

40

45

May 2015 position


CBOT: Daily Soya Oil Futures (c/lb)

13 March 2015


Daily indices from 1 Oct 2014 until 12 March 2015

Oct Nov Dec Ja15 Feb Mar

80

90

100

110

120

130

1 October 2014 = 100

CBOT: Daily Indices of Soybean Complex

Soya Meal May 15

Soya Oil May 15

Soybeans May 15

13 March 2015


Daily indices from 12 March 2014 until 12 March 2015

Mar14 Apr May Jun Jly Aug Sep Oct Nov Dec Ja15 Feb Mar

70

80

90

100

110

120

12 March 2014 = 100

CBOT: Daily Indices of Soybean Complex

Soya Meal May 15

Soya Oil May 15

Soybeans May 15

13 March 2015



the airport

Soybean prices were surprisingly firm already in Nov and Dec, despite the huge US crop

-Reserved farmer selling in the US, Argentina, …

-Farmers have become an important market factor


900

950

1000

1050

1100

1150

1200

1250

1300

May 2015 position


CBOT: Daily Soybean Futures (c/bu)

13 March 2015


Farmers dissatisfied with prices. Have become reserved sellers.

Arg crush in Jan+Febr 15 very small (slow exports)

Silo bags have become widespread in Argentina and - - now also in Brazil

1) Usually 200 Tonnes2) Soybeans can be stored for one year with-out major quality issues

13 March 2015


13 March 2015


Source: Diario de Cuiaba, Mato Grosso- > the truckers‘ strike in Brazil fromFebr 18 until early March was theworst in 15 years

13 March 2015


In CHINA oilseed output will continue to decline in 14/15 to a 15-year low

- Crush boost (98 Mn)

- Agricultural land is shrinking every year

- Farmers switch to other crops, mainly to grains

Huge Chinese buying also supported soybean prices

96/97 99/00 02/03 05/06 08/09 11/12 14/15F

20

30

40

50

60

70

80

90

100Production (Mn T)

Crushings (Mn T)

CHINA: Oilseed Output & Crushings

13 March 2015


93/94 96/97 99/00 02/03 05/06 08/09 11/12 14/15

0

10

20

30

40

50

60

70

80

90

CHINA: Imports of Oilseeds and Oils & Fats

Mn T

Oils & Fats

Oilseeds

CHINA:

In domestic supply deficit

Booming imports in 14/15:Soybeans 75 Mn TRapeseed 4.5 Mn

But vegetable oil importsdeclining (cutting stocks), mainly of soya andrapeseed oils.

Palm oil imports recover

13 March 2015


99/00 00/01

01/02 02/03

03/04 04/05

05/06 06/07

07/08 08/09

09/10 10/11

11/12 12/13

13/1414/15F

0

2

4

6

8

10

12Soya oil

Palm oil

Others

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

99/00 00/01

01/02 02/03

03/04 04/05

05/06 06/07

07/08 08/09

09/10 10/11

11/12 12/13

13/1414/15F

0123456789

10111213

Others

Soya oil

Palm oil

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

China and India largely dependent on Palm Oil Imports

13 March 2015


01/02 02/03

03/04 04/05

05/06 06/07

07/08 08/09

09/10 10/11

11/1212/13

13/1414/15

-30

-20

-10

0

10

20

30

40

50

100

200

300

400

500

600

700

800

900

Production (y1)

End stocks (y1)

Prices (y2)

Change from a Year Ago (Mn T)

10 Oilseeds: World Output & Ending Stocks

Soybean prices

10 OILSEEDS:Ample world supplies of oilseeds in 2014/15 season

Output & stocks rising in 3rd season in a row

And again in 2015/16?

Prices have declined to multi-year lows ! - >Bearishness already discounted ?

13 March 2015


In past 16 years production of soybeans almost doubled to 312 Mn (now 60% of all oilseeds), up 28 Mn vs 13/14

2014/15 production (Mn T):

Rapeseed 69.1 (-1.1 Mn T)

Sunflower 41.0 (-2.3 Mn T)

Groundnuts 27.2 (-1.4 Mn)

Cottonseed 44.2 (+0.5 Mn)

98/99 00/01 02/03 04/05 06/07 08/09 10/11 12/13 14/15F

90

110

130

150

170

190

210

230

250

270

290

310

330

350

10 Oilseeds: World Production (Mn T)

Soybeans

Other 9 oilseeds

13 March 2015


SOYBEANS

Our current soybean cropestimates 2014/15 (vs 13/14) in Mn T:

USA 108.0 Mn T (vs. 91.4)Brazil 93.8 (vs. 86.1)Argentina 54.5 (vs. 52.0)India 8.7 (vs. 8.8)China 12.0 (vs 12.0)

World: 312 Mn T (vs 284)

Soybeans: Production and Area

94/9596/97

98/9900/01

02/03 04/05

06/07 08/09

10/1112/13

14/15F

40

80

120

160

200

240

280

320

World Production (Mn T) and Area (Mn ha)

SOYBEANS

Harvested Area

Production

13 March 2015


SOYBEANS

USA: big jump in output on higher area + yields in 2013 and 2014. But future growth will be limited by lack of acreage

Most of the production growth in the future must come out of S. America.But will it really?

Soybean Production in the USA and South America

75/76 81/82 87/88 93/94 99/00 04/05 09/10 14/15F

0

20

40

60

80

100

120

140

160

Soybean Crop Trend Since 74/75 (Mn T)

U.S.A.

Argentina, Brazil & Paraguay

13 March 2015


� World supplies of soybeans ample (+37 Mn T) in 2014/15.

� For all other oilseeds other than soybeans we estimate: world

production -3.5 Mn T (vs +13.2) and crushing -2.3 (vs +10.2)

� Reduced softseed crush will have significant impacts on global

vegetable oil production.

� Rising dependence on soybeans - - we will be crushing for oil

- - but soybeans are a meal seed - - bullish on the oil share

� Markets are in transition - - > oilmeals prices set to fall to

stimulate demand in April/Sept 2015, but veg oil supply

relatively tight

Summary of the Global Outlook in 2014/15

13 March 2015


O c t o b e r / S e p t e m b e r99/00 02/03 05/06 08/09 11/12 14/15F

100

120

140

160

180

200

220

240

260

10 Oilseeds : World Crushings (Mn T)

9 other seeds

Soybeans

Crush of all 9 oilseeds (other than soya) is set to suffer a drop of 2.3 Mn T in 2014/15 vs. a boost of 10.2 in 2013/14

This will have a major impact on oils & fats

More soya oil will be required, boosting the world soya crush by 14.0 Mn T in 2014/15 (vs +12.6), and creating a surplus in oilmeals

13 March 2015


Only a below-normal growthin world production of 2.0 Mn T is expected for 2014/15 (against +11.4 in 2013/14)

In 14/15 annual growth in palm oil production only half of average growth

Production deficit, keepingveg. oils prices at a rel. highpremium vs. mineral oils

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

04/05 05/06

06/07 07/08

08/09 09/10

10/1111/12

12/13 13/14

14/15F

0

2

4

6

8

10

12

Change From Year Ago in Mn T

17 OILS & FATS: Production

13 March 2015


The growth in production isslowing down in 2014/15:

Palm oil will probably showthe smallest output growth in 13 years (+1.4 Mn T)

Sun oil production will decline by 0.9 Mn T versus a boost of 2.7 Mn T in 2013/14

Olive oil -0.8 Mn T (vs +0.9)

Biggest increase in soya +2.1


10/11 11/12 12/13 13/14 14/15

-2

-1

0

1

2

3

4

Palm Oil Soya Oil

Sun Oil Rape Oil

Change on Year in Mn T

World Production of 4 Major Oils

13 March 2015


93/94 96/97 99/00 02/03 05/06 08/09 11/12 14/15F

0

10

20

30

40

50

60

70

17 OILS & FATS : World Production (Mn T)

Sun oil

Rape oil

Soya oil

Palm oil

9 Other oils4 Animal Fats

Palm oil the mostimportant oil today

In 2014/15 PO & PKO account for33% of world output &62% of exports (48 Mn)

On only 6% of the area

But the prices of PO still largely depend on S & D of other veg oils

plus on energy pricesand energy policies

13 March 2015


J a n u a r y / D e c e m b e r

1997 1999 2001 2003 2005 2007 2009 2011 2013 2015F

3

6

9

12

15

18

21

24

27

30

33

Malaysia Indonesia

PALM OIL : Production in Key Countries (Mn T)

For Oct/Sept 2014/15 weestimate production in Mn T:

Malaysia 19.3 (vs 20.1)Indonesia 32.4 (vs 30.5)

_________

Output in Jan/Dec 2015:

Malaysia 19.7 (vs 19.6)Indonesia 32.9 (vs 30.8)

13 March 2015


In 2014/15 below-average growth in supplies in the 2nd consecutive year

- Result in rel. high price premiums of palm oil over crude mineral oil- and explains the small discount to soya oil

- Higher seed oil output required, most of which has to come from soybeans (a meal seed)


00/01 02/03 04/05 06/07 08/09 10/11 12/13 14/15F

00,5

11,5

22,5

33,5

44,5

55,5

Annual Change (Mn T)

PALM OIL : World Supplies

13 March 2015


Soya Oil 23,0%Palm Oil 30,0%

Rape Oil 13,3%

Sun Oil 7,7%

PKO&CNO 4,9%

Others/An.Fats 21,0%

2014/15 - - 202.0 Mn T

Soya Oil 20,1%

Palm Oil 14,2%

Rape Oil 11,4%

Sun Oil 9,9%

PKO&CNO 5,2%

Others/An.Fats 39,3%

1991/92 - - 83.5 Mn T

World Production of 17 Oils & Fats

13 March 2015


Soya meal 62,7%

Rape meal 12,1%

Sun meal 5,4% Fish meal 1,3%

Others 18,5%

20014/15 - - 317 Mn T

Soya meal 50,7%

Rape meal 10,3%

Sun meal 7,1%

Fish meal 4,6%

Others 27,3%

1990/91 - - 137 Mn T

World Production of 12 Oilmeals

13 March 2015


00/01 02/03 04/05 06/07 08/09 10/11 12/13 14/15F

708090

100110120130140150160170180190200210

12 Oilmeals: World Production (Mn T)

Soyameal

Other 11 oilmeals

13 March 2015


05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15F

-8

-6

-4

-2

0

2

4

6

8

10

12

14

Soyameal

11 Other Meals

Change from Previous Season (in Mn T)

12 OILMEALS : World Production

13 March 2015


The prospective growth in world consumption in 2014/15 is set to exceedthe growth in production !

Production surplus 13/14

Global stocks are likely todecline to only 13% ofannual consumption


04/05 05/06

06/07 07/08

08/09 09/10

10/1111/12

12/13 13/14

14/15F

0

2

4

6

8

10

12Production Demand

Change From Year Ago in Mn T

17 OILS & FATS: Production & Demand

13 March 2015


86/87 90/91 94/95 98/99 02/03 06/07 10/11 14/15F

0153045607590

105120135150165180195210225240

012345678910111213141516

Total Usage and Annual Change (Mn T)

17 OILS & FATS : World Disappearance

Annual Change

World Disappearance

World demand of oils/fats very strong until 2014

doubling in past 20 years

Most of that growth was on account of palm oil

Mainly for food, mainly in the developing ctries

Big change in 2014/15 : the slowest demand growth in 11 years !

13 March 2015


In Oct/Dec 2014 worldconsumption was still relatively high and was upby 2.1 Mn T or 4.2%

But the consumptiongrowth is likely to slow toonly 1.1 Mn T or 2.4% in Jan/March 2015

and just 1.3% in Apr/Sept

Consumption for energyto fall by around 1.5 Mn T in Jan/Sept 2015

86/87 90/91 94/95 98/99 02/03 06/07 10/11 14/15F

0153045607590

105120135150165180195210225240

012345678910111213141516

Total Usage and Annual Change (Mn T)

17 OILS & FATS : World Disappearance

Annual Change

World Disappearance

13 March 2015



the airport

93/94 96/97 99/00 02/03 05/06 08/09 11/12 14/15F

0

5

10

15

20

25

3017 OILS & FATS: Exports of Major Countries (Mn T)

Indonesia

Argentina

U.S.A.Canada Ukraine

Malaysia

Dominance of Malaysia & Indonesia in world exports of all oils and fats

Both countries also benefit from logistical constraints in many other export locations

13 March 2015


The graph shows stocks relative to annual consumption for oilseeds and for oils & fats

While the global oilseed stocks/usage ration is set to increase further in 2014/15,

Stocks of oils & fats relative to usage will be declining

Meal prices are overvalued, veg oil prices to appreciate

Stocks/Usage Ratio of Oilseeds and Oils & Fats

At the End of the Season

2001 2003 2005 2007 2009 2011 2013 2015F

8

10

12

14

16

18

20

22

24

17 oils & fats

10 oilseeds

World Stocks in Percent of Annual Usage (%)

13 March 2015


Current prospects arethat world soybeansupplies will remainample in 2015/16

But weather risks

Producers have startedto respond. Rape andsunseed output may fall.

One major crop failureaway from higher prices!

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

0

20

40

60

80

100Soybeans: World Stocks as of end-August (Mn T)

13 March 2015


Monthly Averages until 12 March 2015Ja03Ja04Ja05Ja06 Ja07Ja08Ja09Ja10Ja11Ja12Ja13 Ja14Ja15

25

30

35

40

45

50

Calculated with prices in N. Europe

Soya Oil Share of the Combined Product Value

%

Price prospects: 1) With ample supplies (on

paper) soybeans havedownward potential in the next 1-3 months andalso in July/Dec 2015, unless US new-cropprospects deteriorate.

2) Meal prices look evenmore bearish

3) Oil share to recoverfurther (to 35% or 37 ?) implying that soya oilprice should appreciate

13 March 2015


Price Prospects - - amidst many uncertainties, my forecast:

� The global market is in a tug-of-war between bearish demand

and bullish supply fundamentals

� Fluctuating, but downward potential for veg oil prices is limited

� Veg. oil prices continue to divorce from weak mineral oils.

(Mineral oil prices may have reached their low, or close to it).

� Likely downward pressure in meal to become bullish for oil.

We enter the lower summer demand season in N.H. Seed oils

will have to finance a larger share of the crush value.

� Key uncertainties: Weather in Northern Hemisphere in next

2-6 months, farmer selling, logistics, currencies, politics,…

13 March 2015


� Soya oil prices seen recovering relative to soya meal and may

rise moderately in April/Sept 2015, despite my expectation of

lower prices of soybeans and meal.

� Palm oil: World production declined in Oct/Febr 2014/15.

Stocks currently relatively low, despite poor demand recently.

Production now picking up seasonally, primarily from April and

May onward. But also world import seen rising in Apr/Sept 15,

mainly for food. Prices should thus be supported at sizeable

premiums over crude mineral oil prices.

13 March 2015


� One swing factor to watch is the development in China

� A key swing factor is the magnitude of biodiesel consumption

in Indonesia

� I currently assume that total Indonesian biodiesel production

increases to 3.1 Mn T in 2015, of which 2.2 Mn T used

domestically and 0.9 Mn T for export

� But full implementation of

B10 would imply domestic use of 3.2 Mn T per annum

B15 would even imply a usage of 4.8 Mn T (logistics?)

� One observer: will be implemented in the Indonesian way

13 March 2015



the airport

Thank Youfor Your Kind Attention !

More details are given in the Oil World Weekly & Monthly Reports, which are available on the Internet at www.oilworld.de

13 March 2015



the airport

© Copyright 2015 ISTA Mielke GmbH. This information is destined for internal use only. Any copying, reproduction and/or redistribution of the proprietary content without the prior written consent of ISTA Mielke GmbH is strictly prohibited. Any violation of our copyright will be PROSECUTED. The information and analyses given in this service 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 the subscriber’s use.We invite you to visit us on www.oilworld.de for further information.Phone: +49 40 7610500 for requests and orders.

Documents

Global Supply, Demand & Price Outlook of Oils & Fatsniop.org/wp-content/uploads/2015/03/Final-NIOP-Presentation-Th... · Global Supply, Demand & Price Outlook ... Daily Prices of