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13 March 2015
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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 <Thomas.Mielke@oilworld.de>
13 March 2015
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� ISTA Mielke GmbH – publisher of OIL WORLD - was founded in 1958
� ISTA = International STatistical Agricultural Information
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13 March 2015
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13 March 2015
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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-$/T)Veg oil prices havefallen to 5-year lows
may have bottomed in early Febr 2015
Palm oil discounts vs Arg soya oil narrowedfor the new crop.Is that sustainable?
Financial uncertainties
Economic crisis in China and oth ctries
13 March 2015
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In the short and medium term, palm oil can hardly react to declining prices
But producers of sun oil and rape oil have done that (farmers and crushers resonding)
Supply response
Tug-of-war between the bearish demand and the bullish supply fundamentalsJanuary 1998 until mid-March 2015
'98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15100250400550700850
10001150130014501600175019002050 SBO Du tch
Sun oil EU
Rape oil D utch
CPO cif R'd am
Monthly Prices of 4 Oils (in US-$/T)
13 March 2015
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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
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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
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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
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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
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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
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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
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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
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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)
Daily futures from 2 June 2014 until 12 March 2015Jun14 Jly Aug Sep Oct Nov Dec Ja15 Feb Mar
25
30
35
40
45
May 2015 position
50-day moving average
CBOT: Daily Soya Oil Futures (c/lb)
13 March 2015
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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
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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
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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
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)
13 March 2015
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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
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Source: Diario de Cuiaba, Mato Grosso- > the truckers‘ strike in Brazil fromFebr 18 until early March was theworst in 15 years
13 March 2015
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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
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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
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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
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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
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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
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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
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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
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� 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
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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
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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
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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
O c t o b e r / S e p t e m b e r
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
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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
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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)
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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)
O c t o b e r / S e p t e m b e r
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
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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
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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
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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
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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
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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
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
12Production Demand
Change From Year Ago in Mn T
17 OILS & FATS: Production & Demand
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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
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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
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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
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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
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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
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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
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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
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� 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
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� 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
Your Information Provider - - Independent, Unbiased, Authoritative - - Since 1958 © www.oilworld.de
there somebody to pick me up tomorrow at
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
Your Information Provider - - Independent, Unbiased, Authoritative - - Since 1958 © www.oilworld.de
there somebody to pick me up tomorrow at
the airport
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