World Vegetable Oil Themes in 2018/19 Ben Buckner AgResource Company
World Veg Oil Themes in 2018 POLITICS Disorder, Trade Barriers (India More than China?) HUGE difference between world soybean supply & demand and other oilseed supply & demand CURRENCIES Again boosting profitability in South America, Black Sea WEATHER El Nino? Maybe Stagnant Weather Patterns? More Extremes? Duration of drought in Europe ENERGY Global petroleum deficits likely into 2019 Particularly in US Brent Crude below $70 unlikely Biofuel markets stay healthy
World Veg Oil Themes in 2018 CHINA INDIA ENERGY
World Demand for Ag Products 160% 140% 120% 100% 80% 60% 40% 20% 0% -20% Veg Oil Corn Wheat 136% 79% 27% 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000
Global per Capita Vegoil Consumption Kg 24 19 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000
NO PROBLEM FEEDING 8 BILLION PEOPLE
1998-2018 Change in Harvested Major Crop Acres 55 Mil Hectare Jump! World 1998: 589 Mil Hectares 2018: 643 Mil Hectares 2,2-2,8-1,5 5,8 Asia 9,6 South America FSU Africa North America 6,2 26,2 EU Australia
Peak Agricultural Land Forecasts: Not Until 2025 Possibly 2050? Bil Acres 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Measured ag area FAO/IMAGE IAASTD OECD Outlook MEA Scenario 1 MEA Scenario 2 MEA Scenario 3 MEA Scenario 4
World Population (7.52 Bil 2018) Mil Persons 8 000 7 000 6 000 5 000 4 000 3 000 2 000 1 000 0 2018 2016 2014 2012 2010 2008 2006 2004 2002 2000 1998 1996 1994 1992 1990 1988 1986 1984 1982 1980 1978 1976 1974 1972 1970
Blessed with Water- Africa Could be Self Sufficient? Infrastructure/Tech?
Non-Irrigated US Corn Contest Yield vs US Trendline Yield 515 BPA Irrigated!
Global per Capita Harvested Area HAs 2018 2016 2014 2012 2010 2008 2006 2004 2002 2000 1998 1996 1994 1992 1990 1988 1986 1984 1982 1980 1978 1976 1974 1972 1970
Global Coarse Grain, Wheat & Oilseed Yields Rise Corn, Wheat, Barley, Sorghum, Soy, Canola Combined MT/HA 2018 2016 2014 2012 2010 2008 2006 2004 2002 2000 1998 1996 1994 1992 1990 1988 1986 1984 1982 1980 1978 1976 1974 1972 1970
Memphis Meats; Raised $17 Mil with Retail Product Expected in 2020
The Continued Move Away from Petroleum! China All Electric By 2040?
Ag Tech Faith in Our Future!
Global Oilseed Yield Trends 2019 Trend Yield 2.53 MT/HA, 3 rd Highest Ever MT/HA Yield Trend Yield 2,80 2,60 2,40 2,20 2,00 1,80 1,60 1,40 1,20 1,00 2018 2016 2014 2012 2010 2008 2006 2004 2002 2000 1998 1996 1994 1992 1990
Global Oilseed Yield Trends MT/HA Canadian Canola Russian Sunflower US Soy Ukraine Sunflower +12% +14% +28% +20% 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000
King US Dollar Is based on Strong US Economy
Brazilian Farmers Cheer!
Long Term Brazilian Soybean Production Massive Growth MMTs Production Consumption 160 140 120 100 80 60 40 66 MMTs 88 MMTs 20 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Brazilian Logistics? No Problem.
Brazilian Soybean Exports by Port Northern Arc! Region 2015/16 2016/17 2017/18 2017/2015 Northern Arc 12.6 11.2 17.9 +42% Others 41.7 40.4 50.3 +21% Total 54.3 51.6 68.2 +26%
World Veg Oil Prices $USD/MT Sun Oil Palm Oil Soy Oil
Soy Oil, Palm Oil Price Long Term $/MT Palm Oil Soy Oil
VEGOIL Stocks & Stocks/Use MMTs 25 20 Stocks Stocks/Use 15 10 5 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 18% 16% 14% 12% 10% 8% 6% 4% 2% 0%
ENERGY
Crude Long Term vs. Soy Oil $/bbl Brent Crude Soy Oil $/Lb 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005
World Petroleum Production & Consumption Mil bbls/day Consumption Production 105 100 95 90 85 80 75 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000
World Petroleum Production & Consumption Mil bbls/day Consumption Production 105 100 95 90 85 80 75 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000
Iranian Crude Exports barrels per day
Iranian Crude Exports barrels per day
US Oil Rig Numbers vs. Price Rigs Rigs Spot WTI 1 200 $/bbl 1 000 800 600 400 200 0
US Oil Rig Numbers vs. US Oil Stocks 1,000 barrels Stocks Rigs Rigs 1 200 1 000 800 600 400 200 0
US Exporting Crude
Big Time
Still Net Importer for Now
US Weekly Crude Stocks Simply too Tight for Sub-$65
Palm Cheaper than Crude! $/MT MCPO Brent Crude Oil
US Biodiesel Production
US Biodiesel Margins
US Soy Oil Stocks vs. Crush MMTs Crush (Mil Tons) Stocks (Mil Lbs) Mil Lbs
Industrial Veg Oil Consumption MMTs Palm Rapeseed Soy 40 35 30 25 20 15 10 5 0 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000
TRADE BARRIERS TALE OF TWO MARKETS
World Soybean Price (Fob)
World Soybean Balance Sheet MMTs 120 Stocks Stocks/Use 100 80 60 40 20 Stocks/Use 35% 30% 25% 20% 15% 10% 5% 0 Sep 2018 Aug 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 0%
Combined World Rapeseed, Sun Balance Sheet MMTs Stocks Stocks/Use 12 10 8 6 4 2 0 Stock/Use 14% 12% 10% 8% 6% 4% 2% 0% Sep 18 Aug 18 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000
Change in World Soybean Trade MMTs 20 15 10 5 0-5 -10-15 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
US Soybean Balance Sheet Mil Acres, Bushels 2016/17 2017/18 2018/19 AgResource 2019/20 Beg. Stocks 197 302 395 845 Harvested 82.7 89.5 88.9 82.0 Yield 52.0 49.1 52.8 51.0 Production 4,296 4,392 4,693 4,182 Imports 22 22 25 25 Total Supply 4,515 4,715 5,113 5,052 Feed/Food 146 136 137 135 Crush 1,901 2,055 2,070 2,085 Exports 2,166 2,130 2,060 2,075 Total Demand 4,214 4,321 4,268 4,295 End Stocks 302 395 845 757
Change in US Soybean Seed Technology?
US Soybeans vs. Canadian Canola
US Soybeans vs. Black Sea Sun
China Out of Options?
Indian Veg Oil Imports Fall Sharply
Indian Refined Palm Oil Rup/Kg 750 700 650 600 550 500 450 400 350 300
Indian Rapeseed Rup/MT 55 000 50 000 45 000 40 000 35 000 30 000
Indian Oilseed Production MMTs Cotton Rapeseed Soy 35 30 25 20 15 10 5 0 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000
Malaysian Palm Oil Exports Oct-July MMTs 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18
Malaysian Palm Oil Production Oct-July MMTs 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18
Malaysian Palm Oil Production Less Exports 1,000 MTs 700 000 600 000 500 000 400 000 300 000 200 000 100 000 0-100 000-200 000
Malaysian Palm Oil Production Less Exports 1,000 MTs 700 000 600 000 500 000 400 000 300 000 200 000 100 000 0-100 000-200 000 Recovery from El Nino
World Climate Changing
Weaker Jet Stream = Stronger Storms & Stagnant Patterns
Cool blob = May 2018 Extremes
Cool Blob = June 2018 extremes
Cool Blob = July 2018 extremes
El Nino?
El Nino?
Malaysian Palm Oil Production in El Nino Years MMTs 25 20 15 10 5 0 2016 2014 2012 2010 2008 2006 2004 2002 2000 1998 1996 1994 1992 1990 1988 1986 1984 1982 1980
AgResource Summary Energy Markets Healthy. Supportive. Biofuel Growth Continues, though Likely at Slower Rate in 2019. Weather Uncertain. Volatile. More Extremes Ahead. Government Policy More uncertain than ever. Impossible to trade. For now all indications point towards trade barriers continuing. Veg Oil Markets Seem Cheap
Thank You buckner@agresource.com