1. Recent Developments in Veg Oils Outlook
By Dorab E Mistry
Godrej International Limited

2. Congrats – SEA & Tefla's
Northern India is a major centre for our industry
As our capital city New Delhi deserves a Globoil conference of its own
This conference is most timely considering expected forthcoming events in India

3. IPOB–SEA-SOLIDARIDAD
Historic MOU signed on 16 July 2018 in Jakarta between Indonesian Palm Oil Board, Solvent Extractors Association of India and SOLIDARIDAD to promote ISPO
Now all Palm Oil stakeholders in India must rally to this call for sustainability.

4. Fundamentals First Palm oil production has PEAKED Prices have bottomed
There is a glut of soybeans in the world
Meal demand is soft
World Rapeseed production is lower
Sunseed production could surprise on the upside

5. Other man-made factors
Indian Import duties
Betrayal of Bio Fuels by Trump Admin
Excellent pro-active bio fuel measures by Indonesia and Brazil
Recovery in crude oil prices
Possibility of re-introduction of export taxes in Malaysia and Indonesia

6. Macro Factors USA – China Trade War continues
World Growth will be softer
China economy seems to be slowing
USA economy is slowing
Elections in India and Indonesia
World has not had a weather problem for a very long time

7. Other Macro Factors Outlook for U S Dollar World Interest rates
Outcome of the USA-China Trade Spat
International Trade involves dealing with National Pride and Feelings
Brexit
Russo-Saudi alliance on Crude oil prices

8. Trade Wars
U S farmers have lost Billions of Dollars of Soybean sales as a result of the Trade War with China
China is encouraging soybean imports from Brazil, Argentina, Canada, Ukraine and many other countries
U S farmers may NEVER regain their old market share

9. Indian Import Duties
SEA Proposal to lower the import duty on CPO from 40 to 35% is win win
Refining and packing industry is an Important Industry in Every country
India must equalise the import duty on RBD Olein between Malaysia and Indonesia

10. Palm Prospects
In 2018 Malaysia Palm production was 19.5 mln mt. and Indonesia produced 42 mln mt
For 2019, I repeat my forecast of Malaysian production at 19 to 19.5 mln mt &
Indonesian production at 44 mln mt
World Palm oil production will only rise 2 to 2,5 mln mt against 5 mln mt last year

11. Palm Production Prospects
I must repeat my reasons for pessimism
Low prices began to bite from August onwards. Small holders in Indonesia, particularly in Kalimantan were in distress
We must expect that fertiliser application has suffered since August 2018 and from October it has suffered more

12. Palm Prospects 2019
From about July – August 2018, in Malaysia we had a High Cycle for Palm production. This High Cycle will come to an end around Feb-March After that the trees will require a period of rest
Therefore one cannot be too optimistic about Second Half 2019 production

13. Bio Diesel Mandates
How effectively is Indonesia implementing its B20 Mandate
Is Indonesia expanding bio diesel usage in other industries like power generation
How effectively is Malaysia implementing B10 and when will it go from B10 to B20
When will Export Taxes kick in ?

14. Other Vegetable Oils
The resilience of Sunseed crops in Russia and Ukraine has surprised me
Sun oil has expanded its market by competing with soya oil on price
Are we going to have a Fifth year of massive Sunseed crops ?

15. Rapeseed
Rapeseed oil is losing market share due to its premium over soya oil
Europe, Canada and Australia are not able to increase Rapeseed production
Rape oil usage in bio diesel in Europe will
depend on how much palm oil is allowed to
be used for bio diesel

16. CHINA
2019 soybean crush in China is likely to comfortably exceed the 2018 crush
China USA Trade Spat unlikely to affect soybean imports in 2019 because China has found new sources
After February 2019, will China import some palm bio diesel

17. Soybeans & Soya oil
EU deal on Argentine SME can be a game changer for soya oil. It will depend on the level at which Minimum Export Price for Argentine SME is fixed
If exports of SME from Argentina are curbed, soya oil will drop in price
Post February soybean prices must come under pressure

18. Currencies Has the US Dollar peaked and is it south-bound?
A docile FED points to a gradually weakening USD
EM currencies should stabilise but may not strengthen if energy prices rise

19. Indian Imports 000 12-13 17-18 18-19 Soya 1,090 3,050 2,950
Soya , , ,950
Palm , , ,000
Sun , ,550
Others
Total 10, , ,700

20. INDIA No clear signals on 2019 Monsoon
Indian crop yields slowly improving.
Indian Government will protect farmers
General Elections in 2019 may create some turbulence
Indian imports will be higher by 700,000 mt. Main increase will be Palm

21. INDIA
Indian Oilseed farmers are doing better than other farmers except those growing cereals like Rice, Wheat & Sugarcane
Oilseed farmers earn close to MSP
It is possible that soybean plantings will expand in 2019
SEA MUST establish Model Mustard Farms

22. Potential EL Nino Will a new EL Nino develop from here onwards ?
If it is of moderate intensity, it will affect Palm production in 2020
El Nino may have only a psychological impact on prices in 2019

23. Brief look at Meal & Corn
Crush margins all over the world were excellent but now deteriorated
Meal prices are cheap mainly because of big production of oilseeds
Price outlook for Corn in 2019 is much better than in 2018
Corn Ethanol has a big future

24. World Energy Demand
World Energy Demand grew in by more than 3 mln mt as a result of increases in Indonesia and Brazil
Energy Demand in will be interesting due to much higher mandate in Indonesia. Will Indonesia consume 7.5 mln mt for bio diesel in 2019 ?

25. World Food Demand
World Food Demand for veg oils grows at a steady 3 mln mt annually
and Food Demand also expected to grow 3 mln mt per year

26. World Veg oil Incremental Supply
000 tonnes
Soya oil , ,000
Rape oil
Palm oil , ,000
Others ,000
Total Supply , ,500
Total Demand , ,000

27. Assumptions for Medium Term Price Outlook
Brent crude USD 70 to 90 per barrel
Only ONE more rate hike in 2019 by FED
World GDP growth in 2019 lower than in 2018
Some political turmoil in USA
U S Dollar will be gradually weaken

28. Palm Price Outlook We have bottomed out
At current Ringgit levels, BMD futures on 3rd month can rise to 2400 by March end
The market is hoping to see combined Malaysian & Indonesian stocks decline to about 6 million tonnes by April-May 2019
From March, prices may be Inverted

29. Price Outlook
Palm Production as measured in yields may only bottom in April and recovery will be slower than usual
Soya oil prices FOB Argentina MJJ have risen very fast to almost USD 655 FOB. Further progress will depend on outlook for SME exports

30. Bio Diesel Demand
Price Outlook of ALL Veg oils will depend on ONE MAJOR factor in 2019
Consumption of Bio Diesel
We are now a hostage to Bio Diesel Usage
World must consume 44 mln mt of Bio Diesel in 2019 – a slippage of 1 or 2 mln tonnes can change the Price Outlook

31. Lauric Oils Outlook Coconut Oil supply is better in 2019
CPKO production is higher and non-edible demand is growing only at a steady pace
Stocks of CPKO and CNO are rising
Prices of CPKO and CNO were the first to recover. The premium for forward months should erode

32. Conclusion Prices are recovering gradually Beware an emerging EL Nino
Veg oils are cheap so consumption will expand
Bio Diesel Usage is CRITICAL
GOOD LUCK & GOD BLESS