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Global Vegetable Oil Price Outlook 2013-14

Global Vegetable Oil Price Outlook 2013-14 . By Dorab E Mistry Godrej International Limited. Great to be at Globoil. Congrats SEA on Golden Jubilee Well Done Dr Mehta and Vijay Data My respects to all Past Presidents and Elders Congrats to TEFLA’s and to Kailash Singh and his team .

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Global Vegetable Oil Price Outlook 2013-14

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  1. Global Vegetable Oil Price Outlook 2013-14 By Dorab E Mistry Godrej International Limited

  2. Great to be at Globoil • Congrats SEA on Golden Jubilee • Well Done Dr Mehta and Vijay Data • My respects to all Past Presidents and Elders • Congrats to TEFLA’s and to Kailash Singh and his team

  3. Background I continue to be bullish on INDIA Next year 2014 will be much better post elections? QE coming to an end ? How will the world react when this opium is withdrawn?

  4. Recent Developments • USDA report of 12 September • Large corn & wheat stocks to weigh • Weak currencies will boost exports • Will China really import 69 million mt soybeans in 2013-14?

  5. PALM • Low Cycle was longer • New High Cycle started September and will extend to April 2014 • 2013 calendar year production is lower • Oil Year 13-14 CPO production will be up 3.5 million mt • Stocks will rise from now

  6. INDIA • Oil Year 12-13 imports will be 10.6 million mt against earlier forecast 10.9 mln mt • 2013-14 production will be higher • Growth in consumption is slower • 2013-14 Imports will be 11 mln mt

  7. INDIA 2012-13 2013-14 Production 7,100 7,750 Imports 10,600 11,000 Consumption 17,250 18,100

  8. INDIA Composition of Imports 2012-13 2013-14 Palm 8,350 8,300 Soya 950 1,200 Sun 1,000 1,200 Laurics 300 300

  9. Myth about Indonesian plantings 2 Billion seedlings sold in 2012 Can plant 800,000 hectares Re-planting 150,000 hectares Some wastage New plantings – 600,000 hectares at least Great growth in CPO production in future

  10. Other Oilseeds Soya: Harvest lows in USA in November. If South American weather okay – new lows in January 2014 Sun: Big production. Discount to soya oil Rapeseed: Big yields in Canada. China has 4 mln mt in State Reserve plus private sector. Canola oil will move into USA

  11. Demand • New bio diesel mandates – Brazil & Argentina • USA – Mandate & Blenders Credit • Indonesia mandate • Growth in bio diesel demand – 2 mln mt • Food Demand growth 3 million mt

  12. Incremental S&Ds 13-14 12-13 Soya + 1,500 + 100 Sun + 1,600 - 1,400 Palm + 3,500 + 3,500 Total + 7,100 + 3,000 Demand + 5,500 + 3,500

  13. PRICE OUTLOOK PALM: BMD futures will not decline below 2200 Ringgits in next few weeks. Range bound 2200 to 2400 If big soya crops in SOAM, and Brent falls, BMD can decline to 2000 in January 14 Path of least resistance is Sideways to Lower

  14. PRICE OUTLOOK Soya oil: My March forecast of US$ 900 FOB was achieved quickly Now sideways. Palm discount to widen Sun oil: Discount to soya up to June 14 Rape oil: Premium to soya to narrow Lauric oils: Must erode premium to palm and go lower BMD futures will decline to 3000 Ringgits. May even fall further After August palm will rally all the way to 4000 Ringgits again Soya oil will decline from US$ 1250 to US$ 1150 FOB Argentina. After August can rally and Chicago futures can go to 70 cents

  15. CONCLUSION Uncertain times without QE Fundamentals are Bearish Need a big weather problem to turn Bullish Recall the words of Hank Paulson Good Luck & God Bless

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