Global Supply, Demand and Prices of Edible Oils

Thomas Mielke, for more info www.oilworld.biz POC Conference - - 24 March 2021

Source: ISTA Mielke GmbH, Oil World 1

Your Global Information Provider - www.oilworld.biz24 Mar 2021

Global Supply, Demand and Prices of Edible Oils - - Outlook 2021

Presentation at the POC Event on March 24, 2021

Thomas Mielke, ISTA Mielke GmbH, Oil World,Global Market Research on Oilseeds, Oils and Meals

<[email protected]>


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January 2019 until 18 March 2021Jan19 Apr19 Jly19 Oct19 Jan20 Apr20 Jly20 Oct20 Jan21

708090

100110120130140150160170

the five-year average 2015-2019 = 100

Weekly Edible Oil Price Index

January 2019 until 18 March 2021Jan19 Apr19 Jly19 Oct19 Jan20 Apr20 Jly20 Oct20 Jan21

708090

100110120130140150160170

the five-year average 2015-2019 = 100

Weekly Oilmeal Price Index


Prices on 22 March 2021versus 3 Aug 2020 in US-$ per T :

- Arg soya oil, fob $ 1253 (vs. 782)- Black Sea sun oil $1575 (vs. 815)

- Indo. crude palmoil $ 1100 (vs. 685)- Palmkern oil, cif Rott $ 1480 (vs. 730)

- Soybeans, cif Rott. $ 582 (vs. 385)- Arg soya meal, fob $ 420 (vs. 338)

Where are we going from here?Bullish factors are to a large extent already discounted.

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Soybeans Soyameal Soya oil Sun oil Palm oil Palmkernoil0

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3 Aug 2020 22 March 2021

from early Aug until March 2021

PRICES : Steep Increases in 7 Months

+24%

+93%

US-$ / T

+60%+61%

+51%

+103%

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Palm oil prices rallied to a 9-year high

Record price spread to fossil fuels

Discretionary palm oil demand for energy almost zero

Monthly prices from Jan 2003 until 11 March 2021Ja03Ja04Ja05Ja06Ja07Ja08Ja09Ja10Ja11Ja12Ja13Ja14Ja15Ja16Ja17Ja18Ja19Ja20Ja21

0100200300400500600700800900

10001100120013001400

Crude mineral oil

Palm oil, crude

Monthly Prices of Palm Oil & Crude Mineral Oil (US-$/T)

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Indonesian crude palm oil more than doubled from US $ 500 in May 2020 to US $ 1130 on 23 March 2021, a 9-year high

Palm oil use in biodiesel & HVO still high at 17.3 Mn T in 2020 (23% of total use)

In the 2020/21 season there is, for the first time, a simultaneous tightness of all the 6 major veg oils worldwide Daily prices from 1 July 2020 until 22 March 2021

Jly Aug Sep Oct Nov Dec Ja21 Feb Mar

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1300Soya oil, fob, Argentina

Palm oil, crude, fob Indonesia

Daily Prices of 2 Oils (US-$/T)

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J/M16A/J

J/SO/D J/M17

A/JJ/S

O/DJ/M18A/J

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3Year-On-Year Changes

Quarterly World Palm Oil Output (Mn T)

20212020

2019

201820172016

1st bullish surprise:Lower than expected palm oil production in Jan/Sept 2020 and again in Oct/Dec 2020 and in early 2021. Falling stocks (despite corona-related consumption losses).

World palm oil stocks are currently at a multi-year low and represent only 15.6% of annual usage.

More info is available on www.oilworld.biz


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In 2020 palm oil accounted for 32% and soya oil for 25% of world production

Palm oil production has lost its growth momentum.

Next 5-10 years: palm oil growth to slow by 20-25%

Supply & demand changes of palm & soya oils are key price-determining factors for edible veg oil complex 99/00 02/03 05/06 08/09 11/12 14/15 17/18 20/21F

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8017 OILS & FATS : World Production (Mn T)

Sun oil

Rape oil

Soya oil

Palm oil

9 Other oils4 Animal Fats

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O c t o b e r / S e p t e m b e r

06/07 08/09 10/11 12/13 14/15 16/17 18/19 20/21F-5-4-3-2-10123456789

10Annual Change (Mn T)

PALM OIL : World Production World production of palm oil likely to rebound by 3.2 Mn T in Oct/Sept 2020/21 (but not by as much as four years ago) with Indonesia +3.3 Mn, but Malaysia down 0.5 Mn T

Low opening stocks (-2.5 Mn T) will limit the supply growth to 0.7 Mn T

Only moderate price setback 2021.

Labour shortage (production losses) a major constraint.Rising investments in mechanisation likely in 2021 and 2022


O c t o b e r / S e p t e m b e r

08/09 10/11 12/13 14/15 16/17 18/19 20/21F-3-2-10123456789

PALM OIL: Year-on-Year Change in World Consumption

Mn T

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Prospects of only a moderate recovery in world palm oil supplies andconsumption will limit the price decline for the remainder of 2021

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Big Production Losses in Sunflower Complex

2nd bullish blow:

Drought in July/Sept 2020 severely damaged sunflowerseed crops in the Black Sea region

World sunseed output down 5.5 Mn T in 20/21in Russia down 2.1 Mnin Ukraine down 2.4 Mn

Lower oil content

World production of sun oil down even 3.0 Mn T in Oct/Sept 2020/21. Sun oil exports down 2.9 Mn T.


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Skyrocketing sun oil prices trigger rationing of consumption

Demand shifts have been price-supportive for soya and palm oils

Big Production Losses in Sunflower Complex

Weekly prices from Oct 2019 until 19 March 2021Oct19 Ja20 Apr Jly Oct Ja21 Mar

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Prem./discounts (Y2)Soya oil, Arg., fob (Y1)

For nearest forward shipmentWeekly Prices of Sun Oil & Soya Oil (US-$/T)

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70World Production (Mn T) and Area (Mn ha)

RAPESEED & CANOLA

Production

Harvested Area

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3rd Blow:Tightness in rape oil.

A declining trend in world production since the 2013/14 season

Rapeseed cultivation has lost attractiveness in the European Union and China

High import demand

But prospects point to a price-driven recovery in the years ahead


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Disa ppe aranc eProdu ctio n

World Output & Consum ption of 10 O ilseeds, M n T4th blow in soybeans & oil

Within 5 months the global soybean balance turned from surplus to tightness.

Downward revisions of US, Indian, Argentine and Brazilian crops

Huge Chinese demand

Global production deficits - of 15 Mn T in 2019/20 - of 12 Mn T in 2020/21

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75/76 80/81 85/86 90/91 95/96 00/01 05/06 10/11 15/16 20/210

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200Soybean Crop Trend Since 74/75 (Mn T)

U.S.A.

Argentina, Brazil & Paraguay

Detrimental weather, partly unusual dryness and partly excessive moisture have sharply reduced soybean crops in S.America

My S. Amer. crop estimates are 15 Mn T below potential with this year‘s area

My latest estimates in Mn T for early 2021: Brazil 131 (still too high?)Argentina 44 (too high?) Paraguay 9

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Huge disposals in USA. Exports in Sep/Feb 54.5 Mn T or 87% of total (vs. 30.4 Mn)

In Sept 2021 stocks at 7-year low in the US and at 5-year low worldwide.

Word demand shift to S.America from March. What will China do?

Sept Oct Nov Dec Jan Feb M ar Apr M ay Jun July Aug

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estim ated exports19/20

U.S.A. : Monthly Exports of Soybeans (Mn T)

Daily futures from 1 Sep 2020 until 22 March 2021Sep Oct Nov Dec Ja21 Feb Mar

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Nov 2021

May and November 2021 positions

CBOT : Daily Soybean Futures (c/bu)

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Production deficit this season in the 2nd consecutive year

Soybean crushings up 10-11 Mn T

Stocks declining worldwide (5-year low)

On the demand side Chinese buying is key uncertainty to watch

SOYBEANS : World Supply and Demand ( Mn T )20/21F 19/20 18/19 17/18

Opening stocks 98.60 111.35 93.56 93.77

Production 354.49* 339.93 361.36 343.36

Total supply 453.09* 451.28 454.92 437.13

Crush 320.60* 310.00 302.00 302.86

Other use 43.90* 42.68 41.57 40.71

Ending stocks 88.59* 98.60 111.35 93.56 U.S.A. Aug 31 3.20* 14.28 24.74 11.92 Argentina Aug 31 31.80* 32.93* 32.90* 23.60* Brazil Aug 31 25.20* 24.42* 36.63* 35.62* Other countries 28.39* 26.97* 17.08* 22.42*

Stocks/usage 24.3% 28.0% 32.4% 27.2%

SOYBEANS : World Supply and Demand ( Mn T )20/21F 19/20 18/19 17/18

Opening stocks 98.60 111.35 93.56 93.77

Production 354.49* 339.93 361.36 343.36

Total supply 453.09* 451.28 454.92 437.13

Crush 320.60* 310.00 302.00 302.86

Other use 43.90* 42.68 41.57 40.71

Ending stocks 88.59* 98.60 111.35 93.56 U.S.A. Aug 31 3.20* 14.28 24.74 11.92 Argentina Aug 31 31.80* 32.93* 32.90* 23.60* Brazil Aug 31 25.20* 24.42* 36.63* 35.62* Other countries 28.39* 26.97* 17.08* 22.42*

Stocks/usage 24.3% 28.0% 32.4% 27.2%


O c t o b e r / S e p t e m b e r 06/07 08/09 10/11 12/13 14/15 16/17 18/19F 20/21F

7090

110130150170190210230250270290

12 Oilmeals: World Production (Mn T)

Other 11 oilmeals

Soya meal

12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21F-6-4-202468

1012141618

Soya meal

11 Other Meals

Change from Previous Season (in Mn T)

12 OILMEALS : World Production

Increasing Dependence on Soya Meal Worldwide

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Rest of world

China,P.R.

Change from Previous Season (in Mn T)

12 OILMEALS : World ConsumptionWe at Oil World anticipate a sharp increase in Chinese soybean crushings by 6.3 Mn T this season (vs 5.2 lyr)

The pork sector has recovered from the crisis caused by the African Swine Fever two years ago

But in Jan/March 2021 soya meal usage fell short of expectations. Rising meal stocks, lower meal prices and crush margins. Higher veg oil imports.

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Prices from 1 Oct 2018 until 19 March 2021Oct Nov Dec Jan Feb Mar Apr May Jun Jly Aug Sep

280300320340360380400420440460480500520540

Weekly Prices of Soya Pellets, 47% Arg., fob (US-$/T)

2020/21

2019/20

2018/19

Soybean crushings are now increasingly driven by soya oil demand.

Seasonally rising South American crushings from March onward

Soya meal prices have come under pressure

Soybeans cannot solve an oil supply tightness without creating a surplus in soya meal

Concluding Statements

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Daily prices from 1 Sep 2020 until 22 March 2021Sep Oct Nov Dec Ja21 Feb Mar

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(for nearest forward shipment in US-$/T)

Daily Prices of 2 Vegetable Oils

Soya oil, fob Arg.

Sun oil, fob Black Sea

Tight supplies and skyrockting prices of sunflower oil

Consumers switch to soya and palm oils

Soya oil and palm oil prices are being pulled up by sunflower oil tightness


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Daily share from Sept 2020 until 22 March 2021

Sep Oct Nov Dec Ja21 Feb Mar282930313233343536373839404142

May 2021 position in % of total product value

CBOT : Daily Soya Oil Share

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For the first time, world consumption did not increase in 2019/20 (partly due to covid + lockdowns)

Vegetable oils stocks very low.(Exception is China)

Another production deficit in 2020/21, reducing stocks again

Concluding Statements

17 OILS & FATS : World Supply & Demand ( Mn T ) Forecast O c t o b e r / S e p t e m b e r

20/21F 19/20 18/19 17/18 16/17Op'g stocks . . . . . 30.92* 32.79 32.55 28.21 27.61

Production. . . . . 239.77* 235.49* 237.67 233.22 220.30 Annual change +1.8% -0.8% +1.9% +5.9% +6.9%

Imports . . . . . . . . 95.62* 96.22* 97.04 89.31 88.69Exports . . . . . . . . 95.37* 99.39* 97.46 90.28 89.47

Consumption. . . 240.28* 237.20* 237.02 227.89 218.92 Annual change. +1.3% +0.1% +4.0% +4.1% +3.3%

End stocks . . . . . 30.66* 30.92* 32.79 32.55 28.21

Stocks/usage . . . 12.8% 13.0% 13.8% 14.3% 12.9%

17 OILS & FATS : World Supply & Demand ( Mn T ) Forecast O c t o b e r / S e p t e m b e r

20/21F 19/20 18/19 17/18 16/17Op'g stocks . . . . . 30.92* 32.79 32.55 28.21 27.61

Production. . . . . 239.77* 235.49* 237.67 233.22 220.30 Annual change +1.8% -0.8% +1.9% +5.9% +6.9%

Imports . . . . . . . . 95.62* 96.22* 97.04 89.31 88.69Exports . . . . . . . . 95.37* 99.39* 97.46 90.28 89.47

Consumption. . . 240.28* 237.20* 237.02 227.89 218.92 Annual change. +1.3% +0.1% +4.0% +4.1% +3.3%

End stocks . . . . . 30.66* 30.92* 32.79 32.55 28.21

Stocks/usage . . . 12.8% 13.0% 13.8% 14.3% 12.9%


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O c t o b e r / S e p t e m b e r12/13

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-4-202468

101214

Production Consumption

Change From Year Ago in Mn T17 OILS & FATS: Production & Use Another below-average

consumption growth this season

17 oils: Biggest usage increases in 2020/21:->US, Braz & Indonesia up 2.2 Mn combined

-> China up 1.0 Mn T-> India up 0.3-0.4 Mn-> Oth ctries down 0.5

Details released in the new Oil World Monthly www.oilworld.biz

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05/06 08/09 11/12 14/15 17/18 20/21F05

1015202530354045505560

Soy, Rape, Sun Oils4 Animal FatsPalm Oil 9 Other

17 OILS & FATS : World Exports (Mn T)

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World trade of oils & fats is declining in 2020/21 for the second consecutive year.

The shortage of export supplies is occuring in sun oil, palm oil and soya oil to varying degress and has been price supportive in recent months


99/00 02/03 05/06 08/09 11/12 14/15 17/18 20/21F0

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MalaysiaArgentina

U.S.A.Canada

Ukraine

Russia

17 OILS & FATS: Exports of Major Countries (Mn T)

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Soya Oil17 Oils/Fats

Annual Stocks / Usage Ratios (%)

17 OILS & FATS

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Biodiesel policies are an uncertainty to watch

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Daily prices from Oct 2019 until Mar 22, 2021

Oct19 Ja20 Apr Jly Oct Ja21 Mar

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Crude palm oil (cif Rotterdam)

CPO vs. Gas oil (y2)

Nearby gasoil futures(ICE)

The spread between palm oil and gas oil reached record levels in recent months

Biodiesel production and usage are still high in Indonesia, the US & Brazil. Some rationing in the EU

Indonesian palm oil producers & consumers in the import countries partly finance Indonesian biodiesel program

Will there be temporary adjustments of mandates in 2021?

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BIODIESEL & HVO : World Production ( Mn T )J a n u a r y / D e c e m b e r

2021F 2020 2019 2018EU-27 . . . . . 14.75* 14.45* 14.64 14.07U.S.A. . . . . . 8.10* 7.85 7.35 7.20Argentina. . . 1.56* 1.16 2.15 2.43Brazil . . . . . . 6.30* 5.62 5.16 4.68Colombia. . . .56* .51* .58 .57China. . . . . . 1.50* 1.30* 1.03 .98Indonesia. . . 7.70* 7.35* 7.48 5.37Malaysia . . . 1.00* 1.10* 1.42 1.09Singapore . . 1.83* 1.80* 1.75 1.35Thailand. . . . 1.70* 1.65* 1.65 1.32Oth. ctries.. . 2.50* 2.51* 2.81 2.67Total . . . . . . 47.50* 45.30* 46.02 41.73

Change . . . . . +2.20* -.72* +4.29 +5.09

BIODIESEL & HVO : World Production ( Mn T )J a n u a r y / D e c e m b e r

2021F 2020 2019 2018EU-27 . . . . . 14.75* 14.45* 14.64 14.07U.S.A. . . . . . 8.10* 7.85 7.35 7.20Argentina. . . 1.56* 1.16 2.15 2.43Brazil . . . . . . 6.30* 5.62 5.16 4.68Colombia. . . .56* .51* .58 .57China. . . . . . 1.50* 1.30* 1.03 .98Indonesia. . . 7.70* 7.35* 7.48 5.37Malaysia . . . 1.00* 1.10* 1.42 1.09Singapore . . 1.83* 1.80* 1.75 1.35Thailand. . . . 1.70* 1.65* 1.65 1.32Oth. ctries.. . 2.50* 2.51* 2.81 2.67Total . . . . . . 47.50* 45.30* 46.02 41.73

Change . . . . . +2.20* -.72* +4.29 +5.09

2011 2013 2015 2017 2019 2021F

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tallow rape oil

palm oil soya oil

Biodiesel Use of Major Feedstock (Mn T)

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Apr MJ JAS OND

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Palm Olein, Fob Mal, 18 Mar 2021

Inverted market for vegetable oils

World supplies tighter than expected in Jan/Mar 2021.

Prices at multi-year highs. How long?Risk: Fund liquidation.Demand destruction.

Some price pressure likely in Apr/Jun for soya + palm oils.

Lower prices forecast for July/Dec 2021

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Price forecasts Jan/Dec 2021 (average of range forecast)

Soya oil, Arg. fob, US $ 1100

RBD palm olein, Mal fob, US $ 950

Selected Nearby and Deferred Prices ( US-$/T )Nearby D e f e r r e d P o s i t i o n s

As of March 18, 2021: 1. 2. 3. 4.Soybeans, cif Rot . . . . . . . 579 Ap 579 My 588 Je 519 OSoya pell, Arg, fob. . . . . . . 422 Ap 422 My 421 Je/Jy 424 Ag

Soya oil, Arg, fob. . . . . . 1213 Ap 1198 My 1152 Je/Jy 1096 Ag/SSun oil, Black Sea,fob . . 1590 Ap 1610 My/Je

Palm oleinRBD fob Mal . . 1055 Ap 1000 My/Je 915 Jy/S 840 O/DCoconut oil, cif Rott. . . . . . 1555 Ap/My1550 My/Je 1545 Je/Jy

Selected Nearby and Deferred Prices ( US-$/T )Nearby D e f e r r e d P o s i t i o n s

As of March 18, 2021: 1. 2. 3. 4.Soybeans, cif Rot . . . . . . . 579 Ap 579 My 588 Je 519 OSoya pell, Arg, fob. . . . . . . 422 Ap 422 My 421 Je/Jy 424 Ag

Soya oil, Arg, fob. . . . . . 1213 Ap 1198 My 1152 Je/Jy 1096 Ag/SSun oil, Black Sea,fob . . 1590 Ap 1610 My/Je

Palm oleinRBD fob Mal . . 1055 Ap 1000 My/Je 915 Jy/S 840 O/DCoconut oil, cif Rott. . . . . . 1555 Ap/My1550 My/Je 1545 Je/Jy


Daily prices from 2 Jan 2020 until 22 March 2021Ja20 Feb Mar Apr May Jun Jly Aug Sep Oct Nov Dec Ja21Feb Mar

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1700LAURIC OILS: Daily Prices in Rotterdam (US-$/T)

Coconut oil, cif. Rott.

Palmkernel oil, cif. Rott.

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Coconut oil prices doubled during the past 10 months

CNO & PKO production lower than expected, but recovery in July/Dec 2021Coconut oil premium set to narrow relative to PKO

Price forecasts J/D 2021:Coconut oil - US $ 1380Palmkern oil - US $ 1310

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How long will current tightness last? Uncertainties:

• 1) The weather. 2) Chinese policies (imports & reserve stocks)

• Covid-19 pandemic. How quickly can the vaccination be done?

• Several Governments apply export restrictions to curb

domestic food-price inflation. More to come?

– this is a disincentive for producers to expand (contra-productive)

• Impacts of current very high prices on consumption

– In many developing countries edible oil consumption will be affected

• High volatility from rising fund activity and money flows

• Farmers will increase plantings and investments for 2021/22

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• Prices are likely to stay elevated and above average throughout

2021, but weaken from current levels, if world production of

10 oilseeds rebounds in 2021/22 (on the assumption of higher

plantings and normal to favourable weather) and a global

production surplus becomes likely.

• My 2021/22 world production forecasts (tentative):

– soybeans to 379 Mn T (against 354 in 2020/21), of which the USA 122

Mn T (vs. 113), Brazil 138 (vs. 131), Arg. 50 (vs. 44).

– Rapeseed & canola 66 (64) and sunflowerseed 56 Mn T (vs. 50).

• I currently expect a recovery of oilseed stocks in 2021/22.

• Veg oil stock recovery may take longer if palm oil growth is low

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J a n u a r y / D e c e m b e r2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021F

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PALM OIL : World Production & Area

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Thank You for Your Attention!

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fon +49 40 761 05021

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Global Supply, Demand and Prices of Edible Oils