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Global Vegetable Oil Price Outlook 2011-12

Great to be Globoil. My compliments to TEFLA's and to Kailash Singh and his team My compliments to SEAA big welcome to FOSFA and President Girish Patel and CEO Stuart LoganDon't forget to enrol for SEA-FOSFA Seminar. My prognosis so far. Recovery in CPO production very strong CPO prices on BMD futures would decline decisively to 3000 Ringgits and towards the end of 2011 would rally againMalaysian production

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Global Vegetable Oil Price Outlook 2011-12

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    1. Global Vegetable Oil Price Outlook 2011-12 By Dorab E Mistry Godrej International Limited

    2. Great to be Globoil My compliments to TEFLA’s and to Kailash Singh and his team My compliments to SEA A big welcome to FOSFA and President Girish Patel and CEO Stuart Logan Don’t forget to enrol for SEA-FOSFA Seminar

    3. My prognosis so far Recovery in CPO production very strong CPO prices on BMD futures would decline decisively to 3000 Ringgits and towards the end of 2011 would rally again Malaysian production – 19 million tonnes Indonesian production – 25.5 million tonnes World supply Up by 9.2 million tonnes

    4. Developments post 28 July 2011 Palm trees have rested for 2 years and are producing at great velocity this year Sept and Oct production will be very strong. Markets have NOT yet bottomed out. Indian Refiners will get some relief soon Bearish for palm oil prices for next 8 weeks

    5. Weak demand for US soybeans. Strong Dollar is a problem. Soya complex prices can only recover if drought comes to South America Soya oil share of Soya bio diesel production in USA is only 50% Incremental crush in 2011 will be 10 million tonnes only Soya complex

    6. Other oils Sunflower oil : Production of sun seed has exceeded expectation Sun oil production up by 1 million tonnes Rape oil: Production is down and large tonnages of Canola oil have been shipped to USA. Rape oil production is down 500,000 tonnes

    7. Cottonseed oil : Production will be up 500,000 tonnes Coconut oil: Down 300,000 tonnes Palm Kernel oil: Up at least 700,000 tonnes So Lauric oils net Up 400,000 tonnes Other oils

    8. Incremental Demand Bio fuel demand strong Bio diesel demand Up 3 million tonnes Food Demand Up 3.5 million tonnes For first time in last 3 years, world supply will outstrip demand and stocks will rise in the third and fourth quarter of 2011

    9. Incremental Supply 2011 Soya oil + 1,800 Rape oil - 500 Sun oil + 800 Palm oil + 6,000 Laurics + 400 Others + 500 TOTAL + 9,000

    10. Incremental S & D 2011 Bio diesel Demand + 3,000 Food Demand + 3,500 Total DEMAND + 6,500 Total SUPPLY + 9,000 First time in 3 years, Supply will exceed Demand in a big way

    11. INDIA Indian imports will be 8.8 million in current oil year Next year – 2011-12, imports will be significantly higher

    12. Sustainable Palm oil Settlement between Sinar Mas Group, NGOs and RSPO is very significant RSPO is playing an ever more important role Palm oil needs to be sustainable

    13. PRICE OUTLOOK Which is worse ? Problems of Euro Zone or problems of U S Twin Deficits & Debt Will the Dollar soar on weak Euro or Weaken on U S problems Very High Risk environment today. There will be short periods of extreme pessimism and of extreme relief. Stay calm.

    14. PRICE OUTLOOK PALM: For next 5 to 8 weeks BMD futures will trade between 3100 and 2800 Ringgits Gradual rally from December. World economy will grow at 4%, La Nina conditions will return, new acreage will slow down and palm trees will need to rest. BMD futures can climb to 4000 Ringgits by April to June 2012

    15. PRICE OUTLOOK Soya oil: Current level of $ 1200 to 1250 FOB will hold. U S bio diesel demand may drive Chicago futures higher but cash oil will be stable. By April-June 2012, Chicago soya oil futures can climb to 65 to 70 cents 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

    16. PRICE OUTLOOK Sun oil: Black Sea will exert pressure and trade at a discount to soya oil until January 2012 Any problems in Argentina and sun oil will jump Rape oil will be the premium oil for 2011 and 2012

    17. PRICE OUTLOOK CPKO is plentiful and prices will drop to US$ 1150 CIF Rotterdam Copra production is still not good but CNO has declined sharply By June 2012, CPKO can recover to US$ 1500 again

    18. In Perspective 2011 is a year of bumper veg oil production Supply will rise by at least 6 % Historically, supply rise of 5 to 6% led to a big Bear Market Yet, this is a sign of changing times, we have not even caught glimpse of a bear market !

    19. CONCLUSION This is going to be a period of Great Volatility First we must Go Down Then we can Go Up Keep strong nerves Good Luck & God Bless

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