Global Price Outlook 2024 - 25

By Dorab E Mistry
Godrej International Limited
At 20th GAPKI IPOC 24
 Heartiest Congrats to GAPKI
This is the 20th IPOC hosted by Gapki

I am proud to have spoken at every IPOC

Indonesia is not only the Leader in palm oil

but also one of the fastest growing G20
economies
 What I said at IPOC 23
• CAPRICIOUS CLIMATE
We cannot be bearish on Ag prices
BMD will trade between 3700 and 4500
Ringgits from November 23 to June 24
That CBOT soya oil futures will remain
strong until June and then weaken & Basis
will get stronger
 What I forecast at POC in KL in
March
• Capricious Climate
• BMD will go higher to almost 4500
Ringgits and then retrace to 3800 by Gapki
conference
• BMD peaked in April at 4420 and then
retraced all the way below 4000 and has
now been climbing to new Highs
 Reasons for prices going lower
• Good rainfall in most of the Palm belt
• Decent monsoon rains in India
• Europe had indifferent weather but okay
crops
• Huge soya crop in SOAM and big crop in
North America
Bio Fuels have been very helpful
Oilseed farmers would have suffered but for
the resurgence in biofuel production
• Lop sided expansion – higher production of
oilseeds and stagnation in palm
• This has led to over-production of meal
• Plus India’s switch to Ethanol has created a
big supply of DDG
Reasons for earlier lows & recent
recovery
• Palm uncompetitive and too expensive
• Sun oil was cheap and competitive
• Soya oil outlook improved dramatically
• Now, Rape oil prices are escalating due to
lower production
• Lauric oils are bullish
• Sun oil getting tighter by the day
 A problem for Veg Oil prices
• The biggest problem for veg oil pricing in
2024 has been soft crude oil prices
• Biofuel pricing was constrained by weak
crude & Subsidies required for biofuel have
escalated
• Will subsidies matter or Will Mandates be
forced upon consumers ?
 The Elephant in the Room
• The palm oil industry has been gobsmacked
by the recent strong rally – immediately
after India hiked its import duty
• There is some evidence of very strong Fund
Activity – in Dalian as well as the BMD,
mainly by Funds who have been
spectacularly correct in their price
prognosis
 Reasons for the current Rally
• Production has been below expectation in
Indonesia and Thailand from Jan until Aug.
• Malaysian exports have been strong and
there has been very little stock build
• It is Malaysian stocks and exports that
determine BMD pricing
• The Buy side has been very strong
 One marker which we missed
• The current Rally has blindsided most.
• One important marker which we all failed
to notice was the sharp decline of
Indonesian CPO & RBDPO exports to
Malaysia. This clearly told us ( in
hindsight ) that there was an availability
problem in Indonesia and NO PRESSURE
AT ALL TO SELL.
 Will this marker work again ?
• Yes, it will
• When Indonesia starts exporting large
tonnages of CPO & RBDPO to Malaysia, it
will be a signal that stocks are building up
and becoming burdensome in Indonesia.
That may signal the end of the Rally
 Few comments on the World
Economy
• China is stimulating and growing again
• USA and Europe slide into a mild recession
after a sustained period of growth and
prosperity
• Interest rates need to go lower
• Equity markets need to shed their froth
• The new USA President will impact
 Palm in 2024-25
At POC in KL in March I correctly forecast
lower Palm oil production in 2024
• Age profile of the trees is getting worse
• Almost no expansion of hectarage
• FFB yields are falling
• These factors were taken on board by Funds
who correctly took charge of the market
 Palm Production in 2024
• Malaysian production is turning out to be
better than expected recently
• Indonesia was expected to be lower than
2023 but is improving and may turn out to
be Unchanged. Growing conditions in 2025
will be better than in 2024
 Palm Outlook 2025
• Indonesian B40 announcement headlined
• Sentiment has become too bullish and made
Palm uncompetitive
• Will Indonesia move to B40 from Jan 25 or
will it take 6 months
• Palm demand has been hurt but the over-
riding sentiment is “slow growth or no
growth in palm production”
•
 Is the POGO sustainable ?
• Soft crude oil prices are likely to continue
as OPEC ( particularly Saudi Arabia and
Russia ) are forced to step up production

• How will Indonesia fund its B40

programme. The Export Levy & Tax
structure will need revision urgently
 Too much Refining Capacity
• Indonesia has built too much refining
capacity for palm oil
• Too many refiners chasing CPO makes
CPO much sought after and expensive
• Export markets also prefer CPO
• A perception of Tightness in CPO is bullish
for palm pricing
 Rapeseed
Rape / Canola should be bullish despite the
threat of Anti Dumping Duty in China
• European & Canadian Rapeseed crops are
lower and thanks to NAFTA, the demand
for Canola oil for Renewable diesel in USA
is very strong
• Too early to discuss the Indian mustard crop
 Soya
• Massive 2024 crops in Brazil and Argentina
have been followed by a huge crop in USA
• The outlook for SOAM production this
season is OPEN – Capricious Climate !
• Soya oil is very competitive and forward
demand for MJJ has been very strong
• USA exports of soya oil will be strong and
will support stronger soya oil futures
 Sunseed
• Despite the war since Feb 2022, both
Ukraine and Russia have been able to grow
harvest and process Bumper sun seed crops
• Sun oil has captured new markets
• However 2024 Black Sea crops are lower
by almost 7 to 8 mln mt and after JAN 2025
we shall see tightness and higher prices for
sun oil
 CHINA
• When will China return to high growth and
how will consumption of veg oils develop ?
• Are the Chinese serious about Anti
Dumping Investigation against Canola ?
• As I write this paper on 3rd November 24, I
do not know who will be the new US
President. On 8th November I shall offer
some comments
 INDIA
• India has been a bright spot for Demand
• Indian consumption and demand look very
healthy but Indian farmers are holding
large stocks of oilseed and Crush Margins
are not workable
• When will India revoke the big 20% Hike
in import duty ? It has not worked and adds
to inflation.
 Indian Import Duty Hike

• If India does not urgently revoke the 20%

Hike in import duty on all Veg Oils, it will
have to impose a 27% Import Duty on Fatty
Acids, Mixed Acid Oils, Soap Noodles and
Refined Glycerine otherwise the Indian
Oleochemicals industry will suffer huge
damage
 Indian Imports
• 000 12-13 23-24 24-25
• Soya 1,090 3,500 4,500
• Palm 8,240 9,000 8,500
• Sun 980 3,500 3,000
• Others
• Total 10,670 16,000 16,000
 World Energy Demand
• World Energy Demand grew in 23-24 by
about 3.5 mln mt
• In 24-25 we project further increase in
Energy Demand due to capacity and usage
expansion in Indonesia , Brazil & USA by 4
mln mt.
 World Food Demand
• World Food Demand for veg oils grows at a
steady 3 mln mt annually
• 23-24 World Food Demand grew by 3 mln
mt
• We expect Food Demand to grow by
another 2.5 million tonnes in 2024-25
 Net Effect
• 24-25 23-24

• + 4.0 + 3.5 Energy Demand

• + 2.5 + 3.0 Food Demand
 Veg oil Incremental Supply
• 000 tonnes 24-25 23-24
• Soya oil + 3,500 + 3,000
• Rape oil - 1,000 + 1,000
• Palm oil + 2,500 + 1,000
• Others - 2,000 + 2,000

• Total Supply + 3,000 + 7,000

• Total Demand + 6,500 + 6,500
 Price Outlook Factors
• The deficit in Incremental S & D
• New biofuel mandates & incentives
• Weather in South America
• Trajectory of the US Dollar
• Crude oil prices
• Capricious Climate
• When will India reduce import duty again
 Price Outlook
• I expect Palm futures on the BMD third
month to trade Above and around 5000
Ringgits between now and June 2025.
• CNY & Ramzan - Jan-March very bullish
• If any weather problems in SOAM or
elsewhere, prices can go much higher and
may lead to suspension of some biofuel
mandates
 Price Outlook
• CBOT soya oil futures will continue to
benefit from brisk US bio diesel demand
and the change from Blenders Credit to
Producers Credit .
• Any new SAF announcement will be an
additional bullish factor
• In 2025 there will be No Excess Sun oil to
pressure palm prices
 Lauric Price Outlook
• Coconut oil production is now in a
downtrend
• Prices should trade around USD 1800 to
2000 CIF Rotterdam from now until June
2025
• CPKO prices will follow CNO
 Conclusion
• Capricious Climate is with us again
• Funds have guessed the price outlook much
better
• Will good growing weather so far in 2024
extend into 2025 ?
• GOOD LUCK & GOD BLESS