“Until lions have their historians, tales of the hunt shall always glorify the hunter” Soybeans and Soy Oil Global Supply demand situation and Role of India A PRESENTATION BY McDonald Pelz Global Commodities

Life of a Soybean Trader Fragile- In search of answers

We are going to cover …. In next 30 mins Source: Economist India demand is function of availability of domestic supply not the consumption potential Population pressure is increasing- demand elasticity is very high Map not true representation of Indian Geo Borders- Just rep

23.07 million passengers were on the move on any given day- ???????? India on the move… On any given day- 12617 trains were running on Indian Railway tracks. The total number of passengers carried in 2012-13 was 8.421 billion 23.07 million passengers were on the move on any given day- ????????

Direction of Global Population Consuming Countries population possibly will increased steadily Producing Countries will see stagnate population Welcome to Asian and African Markets Indian population will overtake china around 2025 and will only slow down growing in 2045 ( in normal situation) Population in Million

Important balancing Role in Global Supply Demand Economics Global Supply Hedge… El- Nino Effect on Global Crop Production India was the biggest exporter of grains, oilseeds and meal in the Asian region Important role in global supplies -la nina India stayed food self sufficient. 2008-15 2 years of Bad Monsoon 2014, 2015 lead India to exhaustion of Indian stocks It is important to watch – monsoon of 2017- It will be the most important event of commodity traders Source: FAO Paper Important balancing Role in Global Supply Demand Economics

Let us start with a story…..

China and India (Soybean Vs Veg Oil Import Index) ‘000mt, Source: USDA India Vegetable Oil imports have risen at a faster pace than soybean import into China

World Soybean Production Myn mt, Source: USDA World Soybean Production is concentrated in Americas

US, Brazil Dominates exports and China Imports World Soybean Exports Myn mt, Source: USDA US, Brazil Dominates exports and China Imports

Soybean Production and estimates Myn mt, Data Source: USDA Global Supply, Demand and Trade is increasing China dominates Global Trade with around 65% of global trade India is fifth/sixth among list of producer of soybeans

World Oilseed and Soybeans Mt/Hectare Source: USDA Share of Soybean in Global Production is going up

World Soybean Yield Growth Rate Source – Credit in Picture Technology- GMO driving Growth, we are concerned about farmers

World Soybean Yield Growth Source – Credit in Picture Technology- GMO driving Growth, we are concerned about farmers

World Yield and Indian Yield Mt/Hectare Source: Hightower Indian Share of global soybean yield falling Globally yield is driven by technology – in India by hope We cannot double farm incomes be competitive globally without giving our farmers tools to compete Mt/Hectare Source: USDA

Highly Monsoon sensitive Areas Monsoon- Hope and Technology Soybean Areas Mustard Areas Soyabean Mustard Highly Monsoon sensitive Areas

India Role in Global Veg Oil Market ‘000mt, Source: USDA Hunger games by Manmohan kids– globalization lead to demand spurt, increase in Veg Oil Imports Stagnant Production- Increasing Demand= Imports

Soybean Oil Domestic Supply potential is limited Global prices favourable, as impacted by lanina- India is dominant Player Soybean Oil Domestic Consumption Imports Production World 53969 11069 54293 India 5500 3800 1620 USA 9322 137 10156 China 16000 620 15501

Sunflower Oil Domestic Supply potential is limited Black sea supplies are increasing- potential for India to increase its potential Sunflower Seed Oil Domestic Consumption Imports Production World 15731 7635 17113 India 1820 1800 96 USA 230 45 226 China 1325 850 475

India Oil Basket Ending Stocks around 10pct Source – USDA Ending Stocks around 10pct Domestic Production which is around 30% of consumption- change in domestic production impacts stock status Domestic share in total oil demand going down due to stagnant production

Comparative Numbers China domestic production is keeping pace due to soybean oil production from imported bean to tune of 95 myn mt Domestic soybean production in China is stagnant India domestic production is stagnant with limited hope of revival or increase It is highly inefficient to produce oilseeds in India due to policy constraints Demand should continuously grow for imported veg oil- but world is finding alternate usage in fuel

SE SA Total Demand Supply- Meal Source: USDA, McDonald Pelz Analysis SE + SA demand is increasing for oilseed and Meal Indian supplies are now falling short to meet regional demand

% Growth of meat products Source: USDA, McDonald Pelz Analysis SA + SE is fastest growing meat market in the region… It means more oilseed and feed grain demand

SEA in Graph- Meal demand Source: USDA, McDonald Pelz Analysis SE demand is increasing for oilseed and Meal Indian supplies are now falling short to meet regional demand

India numbers in Graph- Meal Source: USDA, McDonald Pelz Analysis Tightening Supplies making region more dependent on global supplies

It is not only about SND…..

Soybean and Soybean Oil Veg Oil Prices move in same direction as soybean CBOT

Correlation in Soybean and Oil Prices Crude Price and Soybean has high degree of correlation

Sunflower Oil and Soybeans Driver for Sunflower Prices is soybean CBOT- US bean production

Soybean Oil and Palm Oil Prices Who drives what….

Spreads is the name of the game…

In the Nut shell….. Snd is Driver

Global Production - Soybeans Not adding carry out- Price volatility will go up

Global Oilseed Production Major Oilseeds includes Copra, Cottonseed, Palm Kernel, Peanut, Rapeseed, Soybeans and Sunflower seeds.

Crush expansion on back of increased meal demand in SE Asia World Soybean Crush Crush expansion on back of increased meal demand in SE Asia

Reducing Share… China expanding We are helping Argentina Farmers India Soybean Crush Reducing Share… China expanding We are helping Argentina Farmers

Brazil Key to watch Argentina excess wet condition compared to last year. Brazil soybean plantings are just getting started and most of the Brazil growing areas are dry. Soybean planting delayed this year in South America. India received 5% lower rainfall than normal in the monsoon season, nearly half of the country's farmland lacks irrigation. USA in July’17, 14% of soybean acreage were under drought conditions. Overall, 60% of the soybean crop was reported in good to excellent condition, 14% points below the same time last year.

Crush Margin in China is finally positive Important Criterions Crush Margin in China is finally positive

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