Global market recovery outlook for vegetable oils trade Presenter Gavin Maguire Asia Commodities EditorinCharge Reuters News Topics covered Global edible oil supply amp demand trends How the pandemic impacted veg oil markets ID: 1030202
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1. Intergovernmental Group on Oilseeds, Oils and Fats (IGGOOF): 4-5 March 2021Global market recovery outlook for vegetable oils tradePresenter:Gavin Maguire Asia Commodities Editor-in-Charge Reuters NewsTopics covered:Global edible oil supply & demand trendsHow the pandemic impacted veg oil markets“Food vs Fuel” and the path for palm oilWhy price ‘discounts’ matter more for palm oil
2. 5-year chart of palm oil prices2020 was a year of ‘two halves’; first a demand was a problem, then supplyDemand shock:Prices fell 38% from Jan through Mayas lockdowns closed factory canteens, food courts, markets, hotels, restaurants Supply shock:Prices rise 70 38% from June to end December as labour shortages on plantations clipped production just as demand recoveredBursa Malaysia palm oil futures pricesSource: Refinitiv
3. Bursa Malaysia palm oil futures pricesU.S. soybean oil futuresICE canola oil futures5-year chart of key global edible oil pricesAll key edible oil markets broke years-long bear markets in 2020 in synchronized rallySource: Refinitiv
4. Global edible oil output, consumption, imports & stocks‘Big 4’ oils above account for 87% of world edible oil consumptionEdible oil output, use, imports & stocksShare of output, use, imports & stocks
5. Global edible oil output, consumption, imports & stocksSource:USDA
6. Bursa Malaysia palm oil futures in US dollars/tonneUS soybean oil futures in US dollars/tonneGlobal palm oil vs soybean oil pricesPalmoil’s deep discount to soy oil disappeared in late 2019. Will it come back?Palm oil’s deep discount to soybean oil helped ensure palm’s popularity in cost-sensitive marketsSource: RefinitivPalm oil/soy oil ratio2010-2019 average72%2019-2021 average89%
7. Spot refined palm oil, MumbaiSpot refined soy oil, MumbaiIndia crude palm oil importsIndia soy oil + sunoil importsIndia palm oil and soybean oil pricesRecord high palm oil prices will test consumer loyalty in IndiaSource: RefinitivSource: Refinitiv
8. Bursa Malaysia palm oil futures in US dollars/tonneUS soybean oil futures in US dollars/tonneICE gas oil futures in US dollars/tonneDemand for palm oil for biodiesel rises when palm prices competitive vs gasoil?Global palm oil, soybean oil & ICE gas oil pricesPalmoil is currently far more expensive than gas oil – making biodiesel uneconomicalSource: Refinitiv
9. Bursa Malaysia palm oil futuresUS soybean oil futuresSunflowerseed oil – Black SeaRapeseed oil/Canola – Netherlands In the long run, palm oil must be the cheapest to sustain demandIf palm oil prices stay too high relative to other oils, demand will switch to higher quality oilsSource: RefinitivICE gasoil futures
10. US soybean oil futures in US dollars/tonne2019 Indonesia biodiesel mandate, followed by COVID-hit supply problems in 2020 helped push all edible oil prices to multi-year highs Historically, palm oil has had to be the cheapest oil to secure the huge volumes of import demand neededAny measures that push palm oil prices too close to other oils – especially soy oil – risk hurting demand in key cost-sensitive markets like IndiaKey takeaways:
11. US soybean oil futures in US dollars/tonneAny questions?Contact:Gavin Maguire, Reuters NewsGavin.maguire@reuters.com@gavinjmaguire on TwitterThank you