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Soybean Crushing in the EU

Soybean Crushing in the EU. Dr. Julian Conway McGill LMC International International Soya Symposium September 2012 www.lmc.co.uk. Outline of my presentation today.

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Soybean Crushing in the EU

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  1. Soybean Crushing in the EU Dr. Julian Conway McGill LMC International International Soya Symposium September 2012 www.lmc.co.uk

  2. Outline of my presentation today • I will start my talk today by explaining how the growth of china and the advent of biofuels policies have dramatically changed the market for soybeans. • This has had major implications for the development of crushing in the three main soybean growers: the US, Argentina and Brazil. • I conclude with the implications of these factors on soybean crushing in the EU, in general, and in the CEE region, in particular.

  3. 1. The rise of China

  4. China has emerged as a major importer of soybeans

  5. 2. The advent of biofuels policy

  6. Before 2007 there was no link evident between petroleum and vegetable oil prices. CPO was often cheaper than crude oil per tonne.

  7. Since 2007, a price band has appeared, linking vegetable oil prices to petroleum prices, with the prices of oils at a premium to Brent crude.

  8. As a result, biofuels have pulled global oil demand growth ahead of that for meal.

  9. This has encouraged crushing in Argentina and Brazil

  10. The effect on the EU

  11. In response to the growth of Chinese bean imports, the EU has had to start importing more meal

  12. Within the EU, biofuels policies have increased the demand for rapeseed oil dramatically

  13. In response to this new source of demand, crushing margins for rapeseed and soybeans diverged.

  14. Since 2009 they have both begun to decline

  15. The weakest link in the soybean crush margin, has been the price of meal.

  16. This is not because feed grains have been particularly competitive. Soybean meal has in fact been historically cheap.

  17. Instead, it is because of competition from the vast quantities of DDG entering the world market as a result of Ethanol processing.

  18. Soybean crushing in the EU

  19. Soybean crushing has declined, while softseed crushing has increased

  20. Soybean crushing capacity has also declined, but not dramatically and not in the CEE region

  21. As a result, there is significant excess capacity for soybean crushing in the EU.

  22. While the domestic market for soybean meal for feed relies almost entirely on imports

  23. Vielen Dank! • www.lmc.co.uk

  24. Oxford (HQ) 4th Floor, Clarendon Centre 52 Cornmarket Street Oxford OX1 3HJ UK T +44 1865 791737 F +44 1865 791739 info@lmc.co.uk New York 1841 Broadway New York, NY 10023 USA T +1 (212) 586-2427 F +1 (212) 397-4756 info@lmc-ny.com Kuala Lumpur B-03-19, Empire Soho Empire Subang Jalan SS16/1, SS16 47500 Subang Jaya Selangor Darul Ehsan Malaysia T +603 5611 9337 info@lmc-kl.com Singapore M/S LMC International Ltd Singapore Branch Siglap Post Office PO Box 272 Singapore info@lmc-sg.com © LMC International, 2012 All rights reserved This presentation and its contents are to be held confidential by the client, and are not to be disclosed, in whole or in part, in any manner, to a third party without the prior written consent of LMC International. While LMC has endeavoured to ensure the accuracy of the data, estimates and forecasts contained in this presentation, any decisions based on them (including those involving investment and planning) are at the client’s own risk. LMC International can accept no liability regarding information analysis and forecasts contained in this presentation.

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