1. Supply and Demand: Oils and Oilseeds
Istanbul, September the 14th, 2017
Gregoire Deschamps

2. Structure Sunflowerseed and oil fundamentals
Rapeseed and oil fundamentals
Soybeans and oil fundamentals
Uncertainties over North Korean situation

3. Global Sunseed Market 2017/18 stable vs last year crop
Crush expected to be stable as well.
c/o not increasing significantly
The 16/17 production was a record crop, this year production will most likely stay stable vs LY thanks to a bigger crop in Europe and Argentina, overall Black sea will be stable
This being said Crush will remain quite big this year.

4. Sunseed Outlook 2017/18 crop stable from LY
The 2017/18 SFS production in UKR, RUS, EU, ARG, USA and SAF will remain high,
The price incentive to continue planting SFS is large in Black Sea, production margin for sfs in Black Sea is quite healthy.
Area should be stable next campaign.
As ARG production is increasing for the 4th year in a row, it will be interesting to see if they will have an export program again to EU.
2017/18 crop stable from LY
Excellent ROI for farmers planting SFS
UKR: 90%
RUS: 70%

5. Sunflower Trade Flows (17/18)
Argentina to EU trade flow in question
EU-28 c/o with Argy: 575kmt
EU-28 c/o without Argy: 455kmt
New stocks to use: 5%
120 KMT Ukr to EU
50 KMT US to EU
40 KMT Ukr to Turkey
80 KMT Rus to Turkey
200 KMT EU to Turkey
100 KMT PRC to Iran
90 KMT EU to Pakistan
The Argie to EU trade flow at risk, Pesticides + Quality issues 2 years ago have killed the potential flow. We expect the same situation this year.
Few if any were willing to touch Argie SFS without a substantial price discount. For a moment the seed was converging towards interest levels from Pakistan and Iran.
The seed would be consumed with a discount of roughly 60 USD to Canadian canola, but lacking agreement on terms and a small price gap prevented the trade flow.
SFM situation is Asia is heavy keeping SFS demand low this year from Pakistan.
EU Crush margin pretty decent therefore main demand coming from European crushers.
60 KMT PRC to Egypt
90 KMT EU to SAR

6. SFS Crush Crush margins are low all over
Ukraine sees negative margins towards the crop year end
New Crop: Better situation
Larger ports in the Black Sea did rarely calculate to destination LY
Russian small port seed captured Turkish demand
Crush margins in Black Sea were quite low Last Year but the situation seems to be better on New Crop with Crush margin around 20 usd
As mentioned in the previous slide the Crush margin in Europe is quite good, crushers enjoying a 40 usd CM gross, much higher than last year
Demand for sunoil is strong and export program will be big in OND.
So far Ukrainian and Russian SFS remains too expensive vs EU seeds to capture any export demand.
Prices fob Constanza ard 372 usd today (20 usd discount vs Ukr)

7. Global Sunoil Market 2016/17 YoY crush +13% YoY SFO exports only +11%
SFO exports did not keep up with production,
As the SFS crush drastically up, the export surplus for SFO increased simultaneously. Yet it is clear that the export did not keep up with the increased production, as YoY crush increased 13% while the YoY SFO export only went up 11%.
The remaining 2% have increased the SFO stocks in ports.
Argy stocks have also increased last year. The missing EU exports has been absorbed in here and helped to keep the stocks ample.
With current good demand for SFO we expect stocks to be at best stable or to decrease a bit in coming months.
SFO currently trading at 10/15 usd discount to BO, SFO capturing demand vs BO
2017/18
Crush stable
Export to increase
SFO at discount vs BO today

8. SFS: Main conclusion Another bumper crop expected this year.
Very good demand for Sunoil might give some support to the suncomplex.
If sunseed remains at big discount to rapeseed it will catch extra demand
Overall World SnD looks well balanced but extra demand could change the picture in coming months

9. Global Rapeseed Market: Europe
For 2017/18 we expect the EU dependency on imports to continue
Ukrainian production to increase
Australian production to normalize
UKR production has increased and EU production 9 pct, Aussie production will be back to normal with a decrease of 17 pct vs LY
Recently the crush margins across was good (ard 30 usd gross) boosting the demand in the first 3 months of the campaign
Recent decision by EU to decrease the import tax on Argie SME may reduce the import needs.
Rapeoil will need to find extra demand which is possible only if prices are competitive vs other oil which is not the case for the time being.
Overall we see better crop in EU and Black Sea and potentially lower crush/demand.

10. Rapeseed Trade Flows (17/18)
Major stories of 2017/18:
Production in EU: + 9% YoY (from 20.3mmt to 22.2 mmt)
Crush to be at best stable
Production in Ukraine: +75% YoY (from 1.2 to 2.1mmt)
Production in Canada better than initially expected
4.0 MMT Can to China MMT Can to Japan
300 KMT Can to EU
1.5 MMT Ukr to EU
1.5 MMT Can to Mexico
700 KMT Can to US
950 KMT Can to Pakistan
550 KMT Can to UAE
1.5 MMT Aus to EU
120 KMT EU to UAE
180 KMT Aus to China
120 KMT Aus to Japan
Here we can visualize the major trade flows for RS and Canola
EU will continue to import but the flow is expected to be smaller than Last Year.
China is expected to import 4 mmt of Canadian Canola, but recently the Crush margin was better on soybeans than on Canola.
Overall Rapeseed and canola looks quite expensive vs other oilseeds which may reduce the demand in coming months.

11. Global Rapeseed Market: Canada
Another bumper crop this year but stable vs LY
Crush to increase vs LY
Export to be stable at best
Need to build end stocks
Canadian Canola Production
2017/18
19.8
-1%
2016/17 20
8.7%
2015/16
18.4
12%
2014/15
16.4 0%
Past years special crops have captured large acreages due to great margin
In 2016 farmers ignored agronomic risk such as diseases due to firm prices in pulses.
2017 a shift from pulses to Canola and soybeans
The 17/18 Crop in Canada will most likely be bigger than expected a month ago.
If conditions were far from ideal in the south of the country the yields are clearly better than expected and having a crop above 20 mmts is still a possibility
Export is expected to decrease a bit vs Last Year, EU need less imports, Crush margin in China still negative and BS rps took some market share in Pakistan this year
Crush margin in Canada is good, demand for canola oil was quite healthy the past few month enabling crusher to cash a decent margin, overall we expect the crush to increase from 9 to 9.5 mmts this year.
Good production margin on oilseeds so acreages to remain big next year but still need to be confirmed

12. Main conclusion on Rapeseed
Increase in production in main producing areas
Demand not following for the time being since EU potentially open
the door to Argie SME to Europe.
Crush margin is deteriorating.
Premium for rapeseed and canola has to correct in order to attract new demand.
Overall World SnD seems to be well balanced.
Increase in production in main producing areas
Demand not following for the time being since EU potentially open
the door to Argie SME to Europe.
Crush margin is deteriorating.
Premium for rapeseed and canola has to correct in order to attract new demand.
Overall World SnD seems to be well balanced.

13. World Production
Market pretty volatile the past 2/3 months with some uncertainties about conditions in US.
July/Aug weather finally almost ideal for the beans crop suggesting another record crop this season.
SOAM crop expected to be big again even though it seems unlikely to repeat last year yields in Brazil.
Overall World production is expected to remain stable vs Last year
2016/17 world production increased around 30MMT yoy: growing more the average demand per year which we estimate to be around 10MMT/year.
This has resulted in stocks building in all major origins.
Main increases came from the US and BRA where we realized record yields.
Looking forward, we forecast production to remain relatively stable for the 2017/18 marketing year.

14. Crush Demand
If the world production remain stable, the crush demand remains strong and should grow another 5 pct in 17/18.
SBM demand continue to grow in China but not only, some countries like Pakistan and Bangladesh are crushing more and more soybeans enjoying a better crush margin than on softseeds.
Crush Expected to increase around 13MMT or 5% inline with average SBM growth.
Main drivers last season were - China with SBM domestic use estimated around 10% vs 7% the previous year. In addition, other “non Major” showed strong growth with countries such as Pakistan expanding their processing capacity.

15. World SBM growth
Good soybeans crush margin is explain by a steady increase in SBM demand demand. The shifting diets towards meat is the explanations of this growing demand.
World SBM demand expected to continue to increase at a steady pace of +5% which is line with the last 5-year average.
As mentioned in the previous slide, China makes up the bulk of the growth in notional terms, increasing 10%.
World SBM demand expected to continue to increase at a steady pace of +5% which is line with the last 5-year average.
As mentioned in the previous slide, China makes up the bulk of the growth in notional terms, increasing 10% (7% LY) or 4.5MMT – main driver of the higher demand in china was due to the lack of DDGs (-30% or -1.5MMT YoY)

16. Global stocks
- After a year of building stocks last year, we expect the world stock to stay stable this year due to growing demand as shown previously
The record bean crops observed in both the US and SAM raised stocks to a record 97MMT.
Given a more balance global SND forecasted for next year – global stocks is expected to remain relatively unchanged.

17. Global Balance Sheet
Projecting a fairly balanced global SND with production surplus falling from +20MMT in MY 2016/17 to +4MMT in MY 2017/18
Different scenario this year with a well balanced SnD.
So far price for soybeans remains very attractive for farmers so we can expect farmers to keep on growing soybeans as much as possible.
With bigger demand every year we need to see big production every year in order to keep stocks at the same level.

18. North Korea: A lot of uncertainties
North Korea continue to threaten the rest of the World.
Situation seems to be impossible to solve.
The US are concerned and want to apply sanctions towards countries who are in business with North Korea (including China and Russia).
China trying to cool down the situation.
After the recent actions from North Korea, the tensions with the US and with the rest of the world are escalating.
If all countries are condemning these actions, it seems difficult to find a consensus on how to solve the issue.
Some countries like China and Russia are trying to keep the dialogue open in order to avoid any sanctions, or military actions in the region.
The US made a clear statement, if North Korea continue to threaten the USA and his allies, they will have no other choice but to take military actions.
They also proposed to apply sanctions towards North Korean partners including China.
China is the biggest importers of soybeans (but not only) if the US for some reason decide to sanction China, this could impact/reduce the flow of commodity from the US to China. Clearly something to watch in the near future.

19. Thank You