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World Rapeseed Production
European Rapeseed Outlook
European Crude Rapeseed/Soyabean Oil Prices
Sterling/Dollar Levels 2005 To Date
World Palm Oil Production
World Soyabean Production
| Top Producing Countries | ||||
| 2002-2003 | 2003-2004 | 2004-2005 | 2005-2006* | |
| World | 32.50 | 39.28 | 46.06 | 48.41* |
| Key Producers (based on USDA data) | ||||
| EU | 10.55 | 11.00 | 15.34 | 15.41 |
| Germany | 3.83 | 3.64 | 5.28 | 5.05 |
| France | 3.32 | 3.34 | 4.00 | 4.45 |
| UK | 1.47 | 1.80 | 1.61 | 1.90 |
| POLAND | 0.95 | 0.79 | 1.63 | 1.50 |
| China | 10.55 | 11.42 | 13.18 | 13.05 |
| Canada | 4.18 | 6.67 | 7.73 | 9.66 |
| India | 3.60 | 6.80 | 6.50 | 6.80 |
| Australia | 0.84 | 1.62 | 1.50 | 1.40 |
* Current estimates in million tonnes
The European rapeseed oil market is approximately £30-35 per tonne firmer compared to the start of March driven mainlyby growing demand from the biodiesel sector and ongoing demand fromthe food industry, due to the requirement for non GM oil. At the same time, most European refineries are well sold throughto the end of July. The strength in the European market is somewhat strange at the moment given the rising stocks situationin Rotterdam due to the arrival of Canadian rapeseed oil. However, this this oil is not available to the food industry asit is GM and destined for biodiesel use.
The recent rally in prices is obviously driven mostly by demand,but at current prices there are questions about the viability of rapeseed oil as an input for both biodiesel and food consumers. However, in the short-term, it is clear that there are few other alternatives, while in the long-term, individual nations are committed to the biodiesel expansion that will continue to have a major impact on European rapeseed oil. (The European specification for bio-diesel is currently based on rapeoil).
Return to Top of PageEuropean Rapeseed Outlook
European New Crop Outlook
Europe's new rapeseed crop is developing relatively well and looks on course to exceed the production total of last season. The EU produced approximately 15.5 million tonnes of rapeseed in 2005. Production is expected to rise to almost 16 million tonnes based on small increases in planted area across a number of EU countries (including Germany, France and the UK) and a normal average yield. However, the crops are obviously still not yet made but appear to have made it through the winter ok. Oil World this week indicated an EU-25 rapeseed crop of 16.25 million tonnes.
From a food perspective, EU rapeseed oil demand is certainly notincreasing and is actually gradually declining as some consumers switch away from rapeseed oil and into cheaper refinedsunflower oil and non-gm IP soybean oil. However, there are also significant constraints on the availability of these 2 products, which is resulting in continued healthy core demand from the food sector, despite the rallying prices.
It is the long-term biodiesel picture that continues to suggest further strength in crude rapeseed oil prices in the future. The latest projections suggest a 300% rise in demand for vegetable oil in the EU from the biodiesel sector by 2010. The key question will be to what extent does rapeseed oil meet this new demand and how much will be included of other oils (palm, soy and sun in the future)
Currency factors are having a major impact on prices at the moment, with Sterling trading between a low of 1.7250 to just under 1.7600 within a relatively short period of time. This can have a major impact on UK prices, with more volatility expected.There are expectations that Sterling could fall below the 1.7000level in the coming months, which would be very supportive to vegoil prices. However, currency markets are notoriously difficult to predict.
Outlook
There are few fresh fundamental developments but we continue to see confirmation of the growing demand in the biodiesel sector, while the underlying core food demand remains in most locations. We expect very little downside in rapeseed oil prices but in the short-term, but the market is unlikely to rally significantly higher. However, in the long-term, we do see a gradual rally in levels as the biodiesel demand grows.
Return to Top of PageEuropean Crude Rapeseed/Soyabean OIl Prices
Return to Top of Page Sterling/Dollar Levels 2005 To Date
Return to Top of Page World Oil Palm Production
| Top Producing Countries | ||||
| 2002-2003 | 2003-2004 | 2004-2005 | 2005-2006* | |
| World | 27.64 | 29.05 | 34.03 | 34.80* |
| Key Producers | ||||
| Malysia | 13.18 | 13.40 | 15.19 | 14.80 |
| Indonesia | 9.80 | 10.60 | 14.00 | 15.00 |
| Thailand | 0.82 | 0.84 | 0.76 | 0.80 |
| Nigeria | 0.64 | 0.78 | 0.79 | 0.80 |
* Current estimates in million tonnes
PALM
The June palm oil futures market is around 9 ringgits higher compared to the end of March, although Rotterdam crude palm oil prices are actually relatively unchanged. The market continues to be pressured by the burdensome stock situation in Malaysia and a lack ofmajor export demand from India and China. In Europe, stocks are also relatively high but have drawn down over the past 7-10 days.
In the short-term, we do not expect the palm oil market to post a significantrally but also think that 1,400 ringgits will likely provide strong psychological support. Production is very healthy at the moment, we will see a seasonal increase in the coming months. Export demand is relatively poor, although the 1-10 April export data was a little more supportive.
Malaysian stocks are expected to remain above 1.5 million tonnesthrough the next few months, at least. Futures will continue totrade in the 1,400-1,450 ringgits range, based on the nearby months,in the coming weeks. A break below 1,400 ringgits should likely be seen as a good buying opportunity. For the whole of 2006, it looks as though the market could be stuck in a range of 1,400-1,500 ringgits unless there are any sharp changes in the soybean fundamentals (either bearish or bullish) or further surprises in the palm oil supply/demand.
Return to Top of PageWorld Soyabean Production
| Top Producing Countries | ||||
| 2002-2003 | 2003-2004 | 2004-2005 | 2005-2006* | |
| World | 197.28 | 189.12 | 215.58 | 222.26* |
| Key Producers | ||||
| United States | 75.01 | 65.80 | 85.01 | 84.00 |
| South America | 94.15 | 93.23 | 98.73 | 104.21 |
| Brazil | 52.50 | 52.60 | 53.00 | 57.00 |
| Argentina | 35.50 | 34.00 | 39.00 | 40.50 |
| China | 16.51 | 16.00 | 17.40 | 18.30 |
| India | 4.00 | 6.80 | 5.50 | 6.00 |
* Current estimates in million tonnes
European soybean oil prices have eased over the past couple of weeks due to generally bearish factors in both the US and South American fundamentals. Record high US soybean stocks and South American harvest pressure have been key to recent fall in the US futures market, although we have seen a relatively minor correction in the last few days. Losses in the European market have been limited, so far, by some harvest delays in South America recently, which has slowed exports, but this should improve in the coming weeks.
On the supportive side, the market is also now seeing strong mineral oil prices, disappointing Brazilian soybean yields and perhaps the start of more significant demand from the biodiesel sector. There is always the threat of the return of the funds (speculators) in Chicago after a period of relative inactivity from them. As in rape, currency factors have had an impact on European prices.
The basic supply and demand for soy looks pretty bearish at themoment. The US faces record ending bean stocks and potentially a record crop in 2006. Oil stocks are burdensome, while South America is currently in the middle of a record soybean harvest. However, all these inputs are fully known and likely almost completely priced into the market. In addition, farmer selling is likely to dry up if/when bean prices should fall further.
For these reasons, we do expect some weaker prices in the short to medium-term but also believe that downside in prices is likely to be limited. We could see increased volatility in the market once US planting begins, depending on how this develops.
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