Scribd
Upload
52 views17 pages

Global Vegoil Market Insights 2016

1) Palm oil production in Malaysia was severely impacted by El Nino weather conditions in 2015 and production is expected to remain low through July 2016. 2) Indonesia has started its biodiesel mandate program which will increase palm oil consumption but the subsidy required is very high and the initial program only runs through April 2016. 3) Overall vegetable oil supply is expected to increase by 3.1 million tonnes in 2015-2016, but demand is forecasted to increase by 5 million tonnes, leaving the market tight and supporting higher prices. 4) Palm oil holds the key to overall vegetable oil prices in 2016 as production remains low due to lingering effects of El Nino and strong demand from Indonesia's biodie

Uploaded by

Usman Mahmood
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
52 views17 pages

Global Vegoil Market Insights 2016

1) Palm oil production in Malaysia was severely impacted by El Nino weather conditions in 2015 and production is expected to remain low through July 2016. 2) Indonesia has started its biodiesel mandate program which will increase palm oil consumption but the subsidy required is very high and the initial program only runs through April 2016. 3) Overall vegetable oil supply is expected to increase by 3.1 million tonnes in 2015-2016, but demand is forecasted to increase by 5 million tonnes, leaving the market tight and supporting higher prices. 4) Palm oil holds the key to overall vegetable oil prices in 2016 as production remains low due to lingering effects of El Nino and strong demand from Indonesia's biodie

Uploaded by

Usman Mahmood
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 17

Outlook for World Vegoils

2016
By Dorab E Mistry
Godrej International Limited
Congratulations
• Congratulations to PEOC and organisers
• Thank you Rasheed
• Congratulations to Pakistan industry for
success despite huge adversities
• May India – Pakistan dialogue flourish
• 2016 promises to be an exciting year
Background
• 2015 – year of severe El Nino
• Indonesia finally got its Bio Diesel mandate
programme started
• Challenge of very low crude oil price
• China in transition and economy slowing
• Edible oils demand has held up well, with
India in a stellar role
Palm Production
• 2015 Malaysian production failed to reach
20 mln tonnes
• El Nino has had a profound effect
Triple Whammy of Dry Weather, Biological
Low Cycle and Seasonal Low period.
• Low production can last until July 2016
Indonesian Bio Diesel Mandate
• Off to a late but good start from mid
November.
• Subsidy required is very high
• Current programme will run at 200,000
tonnes until April 2016
• New Allocations in March 2016?
• Bio Diesel mandate may not be necessary?
Soya oil
• We expect big crops in Brazil and
Argentina.
• USA Blenders Credit has stabilised soya oil
futures. Oil share is climbing
• Soya oil is gaining market share
• For next 4 months palm and soya
differential will narrow
Rape oil
• 2015 crops turned out to be much better
than expected – in Canada
• Indian winter crop may be higher
• Upcoming crops in EU and Ukraine may
not be great
• Lot depends on China policy on Reserve
Stock of Rape oil
Other oils
• Sun oil: 2015 crops are better than earlier
low expectations
• Fingers crossed on 2016 crops
• Premium of sun oil over soya oil
• Lauric oils: Supply is not great but demand
is soft also
Indian imports
• 15-16 14-15 11-12
• Soya 4,200 2,986 1,080
• Palm 9,750 9,478 7,670
• Sun 1,200 1,542 1,140

• Total 15,600 14,612 10,200


CHINA
• Big rise in soybean imports
• 2015-16 could be as high as 84 million?
• Consumption of veg oil has plateaued
• Reserve Stock of 6 million tonnes of Rape
oil – MUST release this stock
• Must reduce import of rapeseed & oil
• I remain Bullish on China economy
World Energy Demand
US EPA bio diesel mandate
• Indonesian Palm Bio Diesel consumption is
critical
• World Energy demand for veg oils will
grow in 2015-16 by more than my earlier
estimate of 1.5 mln mt only
World Demand
• Food Demand rising at 3.5 mln mt
• Bio fuel demand SHRANK by 1.5 mln mt
in 2014-15.
• We believe bio diesel demand in 2015-16
will recover and expand by more than
earlier estimate of 1.5 mln mt. By how
much?
Incremental Supply
• 000 tonnes 14-15 15-16
• Soya oil + 2,700 + 3,500
• Rape oil - 300 - 1,500
• Palm oil + 1,600 + 1,000
• Others - 100 + 100
• Total Supply + 3,600 + 3,100
• Total Demand + 2,500 + 5,000
Palm holds Key to Prices
• Assumptions
• Brent to trade US$ 30 to 50 per barrel
• FED will not raise rates until Second Half
of 2016
• Ringgit, Rupiah, Real and Peso have
bottomed out and US Dollar has peaked
Price Outlook
• BMD futures will rise quickly to 2600
• May go to 2700 in Q2 2016
• RBD Olein can go to US$ 670 FOB
• So scope for price rises is limited due to bad
macros and low crude oil prices
Price Outlook
• Soya oil futures to 33 cents.
Soya oil FOB can rise to US$ 700 FOB
• Soybeans – below $9 per bushel
• Sun oil & Rape oil – sideways
• Laurics – CPKO US$ 900 - 1000 cif
Rotterdam. CNO can trade $ 200 higher
Conclusion
• Prices are rising. Industry is in good shape
• El Nino of 2015 is the Catalyst
• Congrats to PEOC
• Look at what happened in 1997 – last Asian
Financial Crisis – side by side with El Nino
Good Luck and God Bless

You might also like