Soybean Crushing in the EU. Dr. Julian Conway McGill LMC International International Soya Symposium September 2012

Transcription

1 Soybean Crushing in the EU Dr. Julian Conway McGill LMC International International Soya Symposium September

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 Millions of tonnes Soybean Soybean Meal Soybean Oil

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 EU Prices, US$ per tonne Palm oil was actually less expensive than crude oil Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Brent Crude Palm Oil Soy Oil Rapeseed Oil

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. 1,600 NW Europe prices, US$ per tonne 1,400 1,200 1, Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Brent Crude Palm Oil Soy Oil Rapeseed Oil

8 Oil (Million Tonnes) As a result, biofuels have pulled global oil demand growth ahead of that for meal Meal in soymeal equivalent in million of tonnes Meals, Soymeal Equivalent Oils

9 This has encouraged crushing in Argentina and Brazil 50 Annual crush in millions of tonnes Argentina Brazil US

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 Millions of tonnes of soybean and meal imports Soybean Soybean meal

12 Within the EU, biofuels policies have increased the demand for rapeseed oil dramatically Millions of tonnes / / / / / / / /12 Palm Oil Soy Oil Sun Oil Rape Oil

13 In response to this new source of demand, crushing margins for rapeseed and soybeans diverged. Soybean and rapeseed monthly crush margins (EU) Aug-00 Aug-01 Aug-02 Aug-03 Aug-04 Aug-05 Aug-06 Aug-07 Aug-08 Soybean Rapeseed

14 Since 2009 they have both begun to decline Soybean and rapeseed monthly crush margins (EU) Jan-09 Jan-10 Jan-11 Jan-12 Soybean Rapeseed

15 The weakest link in the soybean crush margin, has been the price of meal. 140% Prices against their long term trends 120% 100% 80% 60% 40% 20% 0% -20% -40% Oct-05 Aug-06 Jun-07 Apr-08 Feb-09 Dec-09 Oct-10 Aug-11 Jun-12 Soybean Soybean Meal Soybean Oil

16 This is not because feed grains have been particularly competitive. Soybean meal has in fact been historically cheap. Ratio of soymeal prices to main feed grain % 350% 325% 300% 275% 250% 225% 200% 175% 150% 125% 100% 75% US Soymeal/corn China Soymeal/corn EU Soymeal/wheat

17 Soybean meal % Instead, it is because of competition from the vast quantities of DDG entering the world market as a result of Ethanol processing % % Million tonnes, meal % 69% 66% 50 63% 0 60% 2001/ / / / / /12 Soybean Rapeseed Sunflower Palm Kernel DDG Soybean %

18 Soybean crushing in the EU

19 Soybean crushing has declined, while softseed crushing has increased 30 Millions of tonnes crushed Soybeans Softseeds

20 Soybean crushing capacity has also declined, but not dramatically and not in the CEE region 25 Millions of tonnes capacity Rest of Europe CEE

21 As a result, there is significant excess capacity for soybean crushing in the EU. 100% 90% Capacity utilisation 80% 70% 60% 50% EU

22 While the domestic market for soybean meal for feed relies almost entirely on imports 6,000 Thousands of tonnes of soybeans 5,000 4,000 3,000 2,000 1,000 0 Austria Equivalent soybeans required for meal CEE Soybeans produced

23 Vielen Dank!

24 Oxford (HQ) 4 th Floor, Clarendon Centre 52 Cornmarket Street Oxford OX1 3HJ UK T F info@lmc.co.uk New York 1841 Broadway New York, NY USA T +1 (212) F +1 (212) info@lmc-ny.com Kuala Lumpur B-03-19, Empire Soho Empire Subang Jalan SS16/1, SS Subang Jaya Selangor Darul Ehsan Malaysia T 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.