1. business and industrial
2. energy
3. oil

Global Supply, Demand & Price Outlook
of Oils & Fats
Presentation at the 81st Annual Convention of NIOP on March 16, 2015
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Thomas Mielke, Executive Director of ISTA Mielke, Oil World,
Global Market Research on Oilseeds, Oils and Meals,
E-mail <[email protected]>
13 March 2015
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13 March 2015
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13 March 2015
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Veg oil prices have
fallen to 5-year lows
Monthly Prices of 4 Oils (in US-$/T)
205 0
190 0
may have bottomed in 175 0
160 0
early Febr 2015
145 0
Palm oil discounts vs 130 0
Arg soya oil narrowed 115 0
100 0
for the new crop.
850
Is that sustainable?
700
Financial uncertainties 550
400
250
Economic crisis in
100
China and oth ctries
'98
SBO Du tch
Sun oil EU
Rape oil D utch
CPO cif R'd am
'99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15
Jan uary 19 98 until mid-March 2015
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Monthly Prices of 4 Oils (in US-$/T)
205 0
190 0
175 0
160 0
145 0
130 0
115 0
100 0
850
700
550
400
250
100
SBO Du tch
Sun oil EU
Rape oil D utch
CPO cif R'd am
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
'98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15
Jan uary 19 98 until mid-March 2015
Tug-of-war between
the bearish demand
and the bullish supply
fundamentals
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RAPESEED & CANOLA
Farmers have reacted,
cutting back plantings
of high yielding oilseed
World Production (MnT) and Area (Mn ha)
70
65
For example rapeseed
60
Production
in EU, Ukraine & India
55
50
And probably also in there somebody to pick me up tomorrow at
45
Canada this spring the airport
40
35
World production of
30
rapeseed to decline by
25
2-3 Mn T in 2015/16
20
15
97/98
95/96
01/02
99/00
05/06
03/04
Area
09/10
07/08
13/14
11/12
15/16F
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Bearishness emanating from the energy sector
Brent (ICE): Daily Futures of Crude Mineral Oil
First position in US-$ per barrel
120
110
100
90
80
70
60
50
40
Ja14 Feb Mar Apr May Jun Jly Aug Sep Oct Nov Dec Ja15 Feb Mar
Daily futures from 2 Jan 2014 until 12 Mar 2015
Daily Prices of Gas Oil & Crude Palm Oil (US-$/T)
1050
1000
950
900
850
800
750
700
650
600
550
500
450
ICE Gas Oil (spot)
Crude palm oil, cif R'dam
Ja14 Feb Mar Apr May Jun Jly Aug Sep Oc t Nov Dec Ja15
Mar
Mar
Daily prices from January 2014 until 11 Mar 2015
13 March 2015
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The graph shows the
boost in production of
biodiesel since 2004
In 2014 production
exceeded expectations
and rose 2.4 Mn T to
29.8 Mn T
Decline of 0.8-1.0 Mn in
2015 - - > for first time !
Plus reductions of oils
& fats use for electricity
production
World Production of Biodiesel (Mn T)
30
25
20
15
10
5
0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015F
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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%
Biodiesel Production (Mn T)
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
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Biodiesel Production (Mn T)
Indonesia is the major
swing factor to be
watched in 2015
Last Friday new propsal
released to raise domestic
biodiesel to B15 !
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
13 March 2015
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World stocks of
soybeans likely to rise to
a record 90 Mn T at the
end of 2014/15 season
Are we at the beginning
of a longer period of
surplus stocks and
depressed prices?
Still, world soybean
crushings could not be
raised sufficiently
Soybeans: Wo rld Stocks as o f end-Aug ust (Mn T)
100
80
60
40
20
0
1 99 5 1 99 7 1 99 9 2 00 1 2 00 3 2 00 5 2 00 7 20 09 20 11 20 13 2 01 5
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ARGENTINA: Soybean Stocks (Mn T)
8
7
Daily Selling Prices of Argentine Peso per 1 US-$
16
Stocks as of March 1
Inofficial exchange rate
Official exchange rate
14
6
12
5
4
3
10
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the airport
8
2
6
1
4
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Jly Sep
Dec
Mar May
Jly
Oct
Mar
Daily selling prices from 2 July 2013 until 11 March 2015
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In my opinion we have seen the lows for soya oil futures. Soybeans
supported by lack of farmer selling and, late Febr, by the Brazilian strike
CBOT: Daily Soya Oil Futures (c/lb)
CBOT: Daily Soybean Futures (c/bu)
1300
45
1250
May 2015 position
1200
40
50-day moving average
1150
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35 up tomorrow at
the airport
1100
1050
30
1000
May 2015 position
950
50-day moving average
25
900
Jun14 Jly
Aug
Sep Oct Nov Dec Ja15 Feb Mar
Daily futures from 2 June 2014 until 12 March 2015
Jun14
Jly Aug Sep Oct
Nov Dec Ja15 Feb Mar
Daily futures from 2 June 2014 until 12 March 2015
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CBOT: Daily Indices of Soybean Complex
1 October 2014 = 100
130
Soya Meal May 15
120
110
Soybeans May 15
100
90
Soya Oil May 15
80
Oct
Nov
Dec
Ja15
Feb
Daily indices from 1 Oct 2014 until 12 March 2015
Mar
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CBOT: Daily Indices of Soybean Complex
12 March 2014 = 100
120
110
Soya Meal May 15
100
90
Soybeans May 15
80
Soya Oil May 15
70
Mar14 Apr May Jun Jly Aug Sep Oct Nov Dec Ja15 Feb Mar
Daily indices from 12 March 2014 until 12 March 2015
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CBOT: Daily Soybean Futures (c/bu)
1300
1250
May 2015 position
1200
50-day moving average
1150
1100
Soybean prices were
surprisingly firm already in
Nov and Dec, despite the
huge US crop
-Reserved farmer selling in
the US, Argentina, …
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at have become an
-Farmers
the airport
important market factor
1050
1000
950
900
Jun14 Jly
Aug
Sep Oct Nov Dec Ja15 Feb Mar
Daily futures from 2 June 2014 until 12 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 Tonnes
2) Soybeans can be
stored for one year without major quality issues
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Source: Diario de Cuiaba, Mato Grosso
- > the truckers‘ strike in Brazil from
Febr 18 until early March was the
worst in 15 years
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Huge Chinese buying also supported soybean prices
In CHINA oilseed output
will continue to decline
in 14/15 to a 15-year low
- Crush boost (98 Mn)
CHINA: Oilseed Output & Crushings
100
90
Production (Mn T)
Crushings (Mn T)
80
70
- Agricultural land is
shrinking every year
60
- Farmers switch to
other crops, mainly to
grains
40
50
30
20
96/97
99/00
02/03
05/06
08/09
11/12
14/15F
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CHINA: Imports of Oilseeds and Oils & Fats
90
CHINA:
In domestic supply deficit
80
Mn T
Oilseeds
70
Booming imports in 14/15:
Soybeans 75 Mn T
Rapeseed 4.5 Mn
But vegetable oil imports
declining (cutting stocks),
mainly of soya and
rapeseed oils.
Palm oil imports recover
60
50
40
30
Oils & Fats
20
10
0
93/94
96/97
99/00
02/03
05/06
08/09
11/12
14/15
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China and India largely dependent on Palm Oil Imports
CHINA: Imports of 17 Oils & Fats (Mn T)
12
10
Soya oil
Palm oil
Others
8
6
4
2
0
00/01 02/03 04/05 06/07 08/09 10/11 12/13 14/15F
99/00 01/02 03/04 05/06 07/08 09/10 11/12 13/14
INDIA: Imports of 17 Oils & F ats (Mn T)
13
12
11
10
9
8
7
6
5
4
3
2
1
0
Others
Soya oil
Palm oil
00/01 02/03 04/05 06/07 08/09 10/11 12/13 14/15F
99/00 01/02 03/04 05/06 07/08 09/10 11/12 13/14
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10 OILSEEDS:
Ample world supplies
of oilseeds in 2014/15
season
10 Oilseeds: World Output & Ending Stocks
Change from a Year Ago (Mn T)
900
50
Production (y1)
End stocks (y1)
Prices (y2)
40
800
Output & stocks rising
in 3rd season in a row
30
20
600
And again in 2015/16?
10
500
0
400
-10
300
-20
200
Prices have declined to
multi-year lows !
- >Bearishness already
discounted ?
700
Soybean prices
-30
100
02/03 04/05
06/07
08/09
10/11
12/13
14/15
01/02
03/04
05/06
07/08
09/10
11/12
13/14
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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)
10 Oilseeds: World Production (Mn T)
350
330
310
Soybeans
290
270
250
230
210
190
170
Other 9 oilseeds
150
130
110
90
98/99 00/01 02/03 04/05 06/07 08/09 10/11 12/13 14/15F
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SOYBEANS
Soybeans: Production and Area
SOYBEANS
Our current soybean crop
estimates 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 Production (Mn T) and Area (Mn ha)
320
Production
280
240
200
160
120
80
World: 312 Mn T (vs 284)
Harvested Area
40
96/97
94/95
00/01
98/99
04/05
02/03
08/09
12/13
06/07
10/11
14/15F
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Soybean Production in the USA and South America
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 Crop Trend Since 74/75 (Mn T)
160
140
120
100
80
U.S.A.
60
40
Argentina, B razil & Paraguay
20
0
75/76
81/82
87/88
93/94
99/00
04/05
09/10 14/15F
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Summary of the Global Outlook in 2014/15
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
13 March 2015
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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
10 Oilseeds : World Crushings (Mn T)
260
240
220
This will have a major
impact on oils & fats
200
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
160
180
Soybeans
9 other seeds
140
120
100
99/00
02/03
05/06
08/09
11/12
October / S eptem ber
14/15F
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Only a below-normal growth
in world production of 2.0
Mn T is expected for 2014/15
(against +11.4 in 2013/14)
17 OILS & FATS: Production
Change From Year Ago in Mn T
12
10
In 14/15 annual growth in
palm oil production only half
of average growth
Production deficit, keeping
veg. oils prices at a rel. high
premium vs. mineral oils
8
6
4
2
0
05/06
07/08
09/10
11/12
13/14
04/05
06/07
08/09
10/11
12/13
14/15F
Oc t ober / Sep te m ber
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The growth in production is
slowing down in 2014/15:
World Production of 4 Major Oils
Change on Year in Mn T
4
Palm oil will probably show
the smallest output growth in
3
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
2
1
0
Olive oil -0.8 Mn T (vs +0.9)
-1
Biggest increase in soya +2.1
Palm Oil
Sun Oil
Soya Oil
Rape Oil
-2
10/11
11/12
12/13
13/14
14/15
October / Septem ber
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Palm oil the most
important oil today
In 2014/15 PO & PKO
account for
33% 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 prices
and energy policies
17 OILS & FATS : W orld Production (Mn T)
70
Palm oil
60
50
40
30
Soya oil
4 An imal F ats
20
10
0
93/94 96/97
9 Other oils
Rape o il
Sun oil
99/00 02/03 05/06 08/09 11/12 14/15F
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PALM OIL : Production in Key Countries (Mn T)
For Oct/Sept 2014/15 we
estimate 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)
33
30
Malaysia
Indonesia
27
24
21
18
15
12
9
6
3
1997 1999 2001 2003 2005 2007 2009 2011 2013 2015F
Janua ry / Decem ber
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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)
PALM OIL : World Supplies
Annual Change (Mn T)
5,5
5
4,5
4
3,5
3
2,5
2
1,5
1
0,5
0
00/01
02/03
04/05 06/07 08/09 10/11
October/September
12/13 14/15F
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World Production of 17 Oils & Fats
2014/15 - - 202.0 Mn T
1991/92 - - 83.5 Mn T
Palm Oil 14,2%
Palm Oil 30,0%
Soya Oil 23,0%
Rape Oil 11,4%
Soya Oil 20,1%
Sun Oil 9,9%
Rape Oil 13,3%
Sun Oil 7,7%
PKO&CNO 5,2%
Others/An.Fats 21,0%
Others/An.Fats 39,3%
PKO&CNO 4,9%
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World Production of 12 Oilmeals
1990/91 - - 137 Mn T
20014/15 - - 317 Mn T
Soya meal 50,7%
Soya meal 62,7%
Rape meal 10,3%
Others 27,3%
Others 18,5%
Sun meal 7,1%
Rape meal 12,1%
Fish meal 4,6%
Sun meal 5,4%
Fish meal 1,3%
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12 Oilmeals: World Production (Mn T)
210
200
Soyameal
190
180
170
160
150
140
130
120
Other 11 oilmeals
110
100
90
80
70
00/01 02/03 04/05 06/07 08/09 10/11 12/13 14/15F
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12 OILMEALS : World Production
Change from Previous Season (in Mn T)
14
12
10
8
6
4
2
0
-2
-4
-6
-8
Soyameal
11 Other Meals
05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15F
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The prospective growth in
world consumption in
2014/15 is set to exceed
the growth in production !
17 OILS & FATS: Production & Demand
Change From Year Ago in Mn T
12
Production
Demand
10
Production surplus 13/14
8
Global stocks are likely to
decline to only 13% of
annual consumption
6
4
2
0
05/06
07/08
09/10
11/12
13/14
04/05
06/07
08/09
10/11
12/13
14/15F
Oc t ober / Sep te m ber
13 March 2015
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17 OILS & FATS : 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 !
Total Usage and Annual Change (Mn T)
240
225
210
195
180
165
150
135
120
105
90
75
60
45
30
15
0
W orld Disappearance
Annual
Ch an ge
16
15
14
13
12
11
10
9
8
7
6
5
4
3
2
1
0
86/87 90/91 94/95 98/99 02/03 06/07 10/11 14/15F
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17 OILS & FATS : World Disappearance
Total Usage and Annual Change (Mn T)
240
225
210
195
180
165
150
135
120
105
90
75
60
45
30
15
0
W orld Disappe arance
Annu al
Ch an ge
16
15
14
13
12
11
10
9
8
7
6
5
4
3
2
1
0
86/87 90/91 94/95 98/99 02/03 06/07 10/11 14/15F
In Oct/Dec 2014 world
consumption was still
relatively high and was up
by 2.1 Mn T or 4.2%
But the consumption
growth is likely to slow to
only 1.1 Mn T or 2.4% in
Jan/March 2015
and just 1.3% in Apr/Sept
Consumption for energy
to fall by around 1.5 Mn T
in Jan/Sept 2015
13 March 2015
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Dominance of
Malaysia & Indonesia
in world exports of all
oils and fats
17 OILS & FATS: Exports of Major Countries (Mn T)
30
25
Indonesia
20
Both countries also
benefit from logistical
15
constraints in many there somebody
to pick me up tomorrow at
Malaysia
other export locations
the airport
10
Argentina
5
Canada
U.S.A.
Ukraine
0
93/94 96/97 99/00 02/03 05/06 08/09 11/12 14/15F
13 March 2015
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Stocks/Usage Ratio of Oilseeds and Oils & Fats
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,
World Stocks in Percent of Annual Usage (%)
24
22
20
18
16
14
Stocks of oils & fats relative
to usage will be declining
Meal prices are overvalued,
veg oil prices to appreciate
12
17 oils & fats
10
10 oilseeds
8
2001
2003
2005
2007
2009
2011
2013 2015F
At the End of the Season
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Current prospects are
that world soybean
supplies will remain
ample in 2015/16
Soybeans: Wo rld Stocks as o f end-Aug ust (Mn T)
100
80
But weather risks
60
Producers have started
to respond. Rape and
sunseed output may fall.
One major crop failure
away from higher prices!
40
20
0
1 99 5 1 99 7 1 99 9 2 00 1 2 00 3 2 00 5 2 00 7 20 09 20 11 20 13 2 01 5
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Price prospects:
1) With ample supplies (on
paper) soybeans have
downward potential in
the next 1-3 months and
also in July/Dec 2015,
unless US new-crop
prospects deteriorate.
2) Meal prices look even
more bearish
Soya Oil Share of the Combined Product Value
Calculated with prices in N. Europe
50
%
45
40
35
30
3) Oil share to recover
further (to 35% or 37 ?)
implying that soya oil
price should appreciate
25
Ja03Ja04Ja05Ja06 Ja07Ja08Ja09Ja10Ja11Ja12Ja13 Ja14Ja15
Monthly Averages until 12 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,…
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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.
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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
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