Vegetable oil prices demonstrate stable growth (with the exception of soy oil), especially for palm oil.
Upward potential for palm oil, rapeseed and sunseed prices
By the end of September 2015 vegetable oil prices recover (with the exception of soy oil), especially for palm oil (around +50 $/t). Prices are supported by higher crude oil prices, as well as by the seasonal slowing down in palm oil production (and in addition by the El Niño related risks regarding possible production losses). At the same time, soymeal prices are down on the nearby. If soybean and rapeseed prices are barely changed compared in September with last month, sunseed see their prices up (around +20 $/t depending on the quotes), with strong spot demand. The fundamentals in the soybean market are getting heavier again in September. The 2015/16 global soybean harvest is forecast at 316 Mt (+0.6 Mt in September). USstocks are now expected at 10 Mt (+1.1 Mt in September), i.e. a very heavy situation.
With strong competition for exports (high volumes from South America), prices in Chicago still have a downward potential (to increase domestic demand and especially exports), which could occur not before the second half of the crop year (farmer’s retention like in the months ahead).
The global rapeseed harvest is almost unchanged in September (-0.2 Mt) at 67 Mt. Supplies are nevertheless revised up in Canada (harvest revised up over several years), and global stocks are revised up to around 5 Mt (+0.6 Mt in September). The situation remains however very tighten the EU (harvest revised slightly down), where prices still have an upward potential.
The sunseed harvest remains forecast at 41.1 Mt (+0.3 Mt in September, mostly in Russia and Ukraine). Crush is revised slightly up compared with August, and stocks at the end of 2015/16 are still forecast at 2.9 Mt. The sunseed situation also looks fragile worldwide. With stocks expected down, the situation looks especially tight for rape and sun oils, and fragile for palm oil (it looks on the contrary conformable for soy oil).
With the decrease in crush margins and the higher meal competitiveness into animal feed, the world soymeal markets are getting tight in September: however considering the expected decline in grain (and soybean) prices, the meal prices do not seem to have any big upward potential.
The oilseed markets are shaped by high supplies in soybean, and a tightness for sunseed and rapeseed, the prices of which still have an upward potential. With the seasonal decline in supplies, palm oil prices could increase, especially in the adverse effects of El Niño were to materialize.
Meal consumption in 2015/16
Consumption for the three meals (soymeal, rape meal and sun meal) is expected to be stable compared to 2014/15.
Soymeal: consumption forecast to rise significantly. Soymeal competitiveness has increased greatly since September. As a result, soymeal consumption is revised up by 0.6 Mt to 30.7 Mt. Since August consumption has been revised up in Germany (+250 kt), United Kingdom (+250 kt), Denmark (+100 kt), Hungary, Poland (+50 kt each) and several other EU countries, but to a lesser extent. On the other hand, it has been revised down in the Netherlands (-330 kt). We now expect soymeal consumption in the EU28 to increase in 2015/16 by 0.85 Mt compared to 2014/15.
Compared to the last crop year rape meal incorporation in compound feeds will be lower due to the lack of competitiveness in 2015/16. However, rape meal attractiveness in September has improved at the expense of sunmeal. Rape meal consumption increases in Germany (+230 kt), but falls in the Netherlands, France (-45 kt each), Hungary and Austria (-40 kt each). Compared to 2014/15 we forecast rape meal consumption in the EU28 to fall by 0.95 Mt to 13 Mt. The main losses are expected in Germany (-0.25 Mt), France (-0.17 Mt), United Kingdom (-90 kt), Spain, Poland (-70 kt each) and in all other EU countries.
In September sunmeal incorporation rate in the EU has been revised down (less profitable). As a result, since last month sunmeal consumption has fallen by 0.55 Mt in 2015/16, to 6.9 Mt. This revision down concerns all EU countries, but the biggest losses are for France (-140 kt), Poland (-115 kt), Netherlands (-55 kt), Germany (-50 kt) and Denmark (-45 kt). Compared to 2014/15 sunmeal is now expected to be 250 kt lower.
We forecast that consumption of the three meals should remain stable at 50.6 Mt in October-September 2015/16 (+0.1 Mt since August). The incorporation of the three meals is forecast to rise (to 22.4% compared to 21.9% last year) following the fall in total raw material consumed by animals in 2015/16. This falls is largely linked to the decrease in animal consumption on the farm that is forecast. Despite the stability forecast for the three main meals we forecast an increase in soymeal consumption (+0.9 Mt), but a fall in rape (-0.7 Mt) and sunmeal (-0.1 Mt) consumption in the crop year.
2015/16: World situation fragile for soymeal
Between August 28th and September 25th, soymeal prices are down on the world market. A robust crush for this period of the year in the United States, Europe, as well as in China and South America, has increased meal availabilities, hence putting pressure on prices. On the Chicago market, the soymeal price lost 14 $/t in the near term, to 340 $/t (-4% for the period). The drop was not as sharp on more distant deliveries: -5 $/t on November, -2 $/t on March and -1 $/t on May.
In Brazil prices are slightly down in the near term, to 328 $/t (-3 $/t). In the EU, soymeal has dropped even more sharply. Out of Ghent, it lost 20 $/t in the near. In CAF Rotterdam, soymeal fell by 17 $/t in the near term and by 23 $/t on more distant deliveries. Ukrainian sunmeal lost 13 $/t on November, at 225 $/t. It is offered at 175 $/t in Argentina (-25 $/t).
Feed production in 2014/15 and 2015/16
Crop year 2015/16 EU production for the three types of feeds in 2015/16 is revised up to 145.7 Mt (+0.26 Mt in September; 144.3 Mt in 2014/15). This is mainly due to an increase in the production of poultry feeds (+0.23 Mt to 54.4 Mt) and to a lesser extent cattle feeds (+20 kt to 41.3 Mt) and pig feeds (+10 kt to 50 Mt). Revisions in September stem mainly from France (+130 kt), Poland (+110 kt), Romania (+80 kt), Germany (+40 kt), Greece (+40 kt) and Spain (+30 kt). However, the production of compound feeds is revised down in Italy (-140 kt), Ireland (-60 kt), Portugal and the United Kingdom (-20 kt each). Poultry feed production
After taking into account the monthly poultry slaughter available up to July for several countries in the EU28 (Belgium, Czech Republic, Denmark, France, Croatia, Hungary, Portugal, Romania, United Kingdom, Sweden, Finland and Slovenia) and until June 2015 for other countries (Poland, Italy, Spain and Germany mainly), EU gross production has been revised up slightly over the 2015 calendar year to 13.88 Mt. The EU gross domestic poultry production is now expected to be 2.5% higher than in 2014. As a result, the production of compound feeds for poultry has been revised up for 2015/16 in Poland (+90 kt), Romania (+70 kt), France (+60 kt), Hungary (+30 kt) and Greece (+20 kt). It has been lowered a little in the following countries Portugal (-20 kt), Slovakia, Czech Republic and Latvia (-10 kt each).
Milk collection for most EU countries remains significantly higher for the fourth straight month for the dairy year 2015/16. It has increased by 2.4% over the first third of the crop year. The low price of milk does not seem to have affected its production in Europe due to an increased dairy herd compared to last year (+1% on average compared to 2014 for the countries that have published data on the dairy herds for MayJuly 2015 – these countries represent 70% of milk collection in the EU). We still however forecast that milk collection should slow over the next few months. This is due to the lack of profitability of dairy herds at this time. EU28 milk collection for 2015/16 is now forecast at 154.2 Mt, up by 2 Mt compared with 2014/15 (or +1.3%). The changes in the milk collection forecasts and the updating of dairy herd data for May-June 2015 has led to a slight increase in the production of cattle feeds in the Netherlands (+80 kt), France (+60 kt), Germany (+40 kt) and Spain (+30 kt). It has however been lowered in Italy (-130 kt), Ireland (-60 kt), United Kingdom (-20 kt). As a result, total cattle feed production has increased by 20 kt since last month.
We have taken into account the data collected in May-June 2015 for pig livestock for several European countries. This has led to very few changes in our livestock forecasts and gross internal meat production over the 2015 calendar year. The number of reproductive sows in the EU in spring 2016 strengthens our forecast for a fall in European pig livestock in 2016: we expect a fall of 1% in the number of fattened animals. Therefore, our pig feed production forecast in 2015/16 has changed little this month. It has increased by 10 kt in Romania and Greece, but fallen by 10 kt in Portugal and Italy.
Compared to 2014/15 the production of feeds in 2015/16 is expected up by 1.4 Mt, i.e. +0.42 Mt for cattle, +0.11 Mt for pig and +0.85 Mt for poultry.
The increase in industrial feed production mainly concerns Poland (+0.3 Mt), Hungary, United Kingdom, Romania, Spain, Belgium (+0.2 Mt each), Ireland and Italy (+0.1 Mt each). On the other hand, compound feed production is expected to fall in France (-0.1 Mt, fall in pig, but increase in poultry) and Germany (-0.1 Mt fall in poultry).