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Global Oilseed Demand Growth Forecast to Outpace Production (Again)

Global oilseed production is forecast to grow slightly in 2018/19. Soybean production is projected up, as Argentina is forecast to rebound from this year's drought, offsetting year-overyear declines in production of the United States. Rapeseed and sunflowerseed are both forecast to continue their growth in production. The palm kernel crop is expected higher in line with palm oil production. Peanut and cottonseed production are expected to decline.

Global oilseed consumption is forecast to rise, led by growth in China’s soybean crush. Global soybean demand, measured by total domestic consumption, is expected to grow at a solid rate, slightly lower than production growth. Consumption of other oilseeds is expected up as well, with the exception of cottonseed where global supplies are reduced.

Global oilseed trade is forecast up on higher demand from China. Global ending stocks are projected to fall, as lower carryin stocks coupled with increased consumption will result in lower ending stocks for 2018/19. While the ending stocks of palm kernel and rapeseed are expected to grow, all other oilseed stocks, led by cottonseed and peanuts, are expected to fall.

Global protein meal production is expected to grow slightly in 2018/19, tempered by a slight decline in fish meal production. Global protein meal consumption is also forecast to rise, mainly driven by robust demand from China. Trade in protein meals is expected to grow as well, with soybean meal exports forecast up. Sunflowerseed meal exports are projected up sharply, while peanut meal exports are forecast to fall.

Global vegetable oil production is expected to grow modestly, with all major oils forecast up except for olive oil. Palm, soybean, and palm kernel oil production are all expected to see a healthy jump on higher crop estimates. Strong soybean meal demand will spur higher crush volumes, resulting in higher soybean oil production. Both rapeseed oil and sunflowerseed oil are projected to experience modest growth.

Global vegetable oil consumption for food is forecast to expand, reflecting growth in population and improved purchasing power in emerging economies. Growing food use will primarily be met by palm and soybean oil, followed by sunflowerseed and rapeseed oils. Global consumption of oils for industrial use is also forecast to increase, in line with growing biodiesel production in major markets. Global vegetable oil trade is expected to see a healthy increase, with strong growth in palm, soybean, and sunflowerseed oils, despite reductions in cottonseed, olive, and coconut oils. Global ending stocks are forecast to grow, led by a jump in palm oil stocks. Growing demand for “golden oils” is outpacing production, and will result in a drawdown of soybean and rapeseed oil stocks.

OVERVIEW

2018/19

Global oilseed production is forecast at 593.7 million tons, up nearly 4 percent. Soybean production is projected at 354.5 million tons, up 17.8 million tons, an increase of roughly 5 percent. Gains in Argentina and India more than offset reductions for the United States, Paraguay, and Canada. Rapeseed and sunflowerseed production is projected higher while small reductions are forecast for cottonseed and peanut. Soybean imports are forecast to rise, driven by strong global demand led by China. Brazil is expected to continue being the leading soybean exporter in 2018/19. Strong global demand for protein feed will boost crush, which in turn will pressure soybean stocks lower. Trade of soybean meal and soybean oil are both forecast to expand on growing global demand. The U.S. season-average farm price for soybeans is projected at $10.00 per bushel.

2017/18

Global oilseed production is raised slightly this month to 572.8 million tons. Larger soybean production estimates for Brazil, Paraguay, and the European Union more than offset a reduction for Argentina. Rapeseed production in India and the sunflowerseed crop in Ukraine, Moldova, and the European Union have been revised up. Peanut production estimates for Nigeria, Chad, and Tanzania have been raised as well, while the U.S. and Turkey cottonseed crops were revised lower. Global soybean exports are forecast higher this month on gains for Brazil, Paraguay, Russia, and Ukraine. Soybean imports have been boosted this month on larger shipments to Argentina, Egypt, the European Union, and Russia. Global soybean ending stocks are raised significantly this month, primarily reflecting a larger harvest in Brazil. The U.S. season-average farm price for soybeans is up $0.05 to $9.35 per bushel.

SOYBEAN PRICES

U.S. export bids in April, FOB Gulf, averaged $417/ton, up $8 from the previous month. In comparison, FOB Brazil Paranagua averaged $430/ton, up $16/ton from last month. FOB Argentina Up River averaged $421/ton, up $21 from last month. Prices have risen sharply in response to crop losses in Argentina. Strengthening soy meal prices and initial signs of an uptick in demand for U.S. supplies both added support. April prices have also been trending higher on growing U.S. supply concerns following the reduced planting intentions reported in the NASS Prospective Plantings report. In contrast, early May prices have been trending downwards, influenced by weakening exchange rates in Brazil and Argentina.

For the week ending May 3, U.S. 2017/18 soybean export commitments (outstanding sales plus accumulated exports) to China totaled 28.7 million tons compared to 35.8 million a year ago. Total commitments to the world are 55.1 million tons, compared to 57.0 million for the same period last year.

2018/19 OUTLOOK

SOYBEANS

• Global soybean production in 2018/19 is forecast to surge to 354.5 million tons, an increase of 17.8 million tons above the 2017/18 production estimate. This increase primarily reflects a recovering crop from the current drought in Argentina. Global harvested area is forecast to expand 3 percent, largely in South America and India, more than offsetting a marginal reduction in the United States. In the United States, lower harvested area, coupled with trend yields, is expected to result in a slight decline of production, but is still projected to be the third-largest on record. Acreage in South America, which will be harvested in 2019, is forecast to rise 6 percent to 61.3 million hectares, with production reaching 188.5 million tons. Soybean production in China is virtually unchanged at 14.1 million tons, while production in India is projected to rebound to 10.8 million tons. Production in Ukraine is forecast to reach a record 4.5 million tons in response to continuing acreage expansion.

Despite the rebound in global production, total global soybean supply is projected to only rise 4 percent with lower carryin from 2017/18. Continued growth in global demand will likely push "disappearance" to exceed production, leading to stock drawdowns in the coming year. The global stocks/use ratio will fall slightly, but will remain at a healthy level.

Global soybean imports are forecast to rise 5 percent in 2018/19, primarily in response to growth in China, Southeast Asia, the Middle East, and Mexico. Brazil and the United States will continue to be the main global soybean suppliers. Brazil’s soybean exports are projected to exceed those of the United States for the seventh year in a row.

• Global soybean meal imports are forecast to grow 3 percent in 2018/19, up from 2017/18 and following a rebound for Argentina. Growth in soybean meal imports is suppressed by growing trade of soybeans, as they compete in identical sectors. Argentina will continue to be the largest exporter of soybean meal. Exports for Brazil, the United States, Bolivia, and India are projected lower. Global soybean meal consumption is forecast to grow 5 percent, led by markets with growing livestock and poultry consumption, such as China, South and Southeast Asia, and the Middle East.

• Soybean oil exports are forecast to rise 3 percent in 2018/19 with total volume projected to reach nearly 11.0 million tons. While competition with other vegetable oils will remain tight, global demand is also expected to grow in 2018/19, on improved affordability spurring food use, and expanding industrial consumption. Ending stocks will decline only slightly, but remain significantly below the 5-year average.

• Highlights

o U.S. soybean exports are projected to rise 6.1 million tons to a record 62.3 million, while meal and oil exports are forecast slightly lower at 11.2 million and 953,000 tons, respectively.

o Argentina soybean exports are projected to surge to 8.0 million tons, meal exports are forecast to grow 1.5 million tons to 30.5 million, and oil is up 425,000 tons to 5.1 million.

o Brazil soybean exports are projected down 1.0 million tons to 72.3 million, meal exports are cut 100,000 tons to 15.5 million, and oil exports are expected slightly lower at 1.3 million tons.

o China soybean imports are projected up 6.0 million tons to 103.0 million, while meal exports remain stable at 1.0 million tons. Oil imports are forecast to decline 100,000 tons to 350,000.

o Egypt soybean imports are up 100,000 tons to 2.9 million while meal imports are expected to decline 100,000 tons to 1.0 million.

o European Union soybean imports are projected to rise 100,000 tons to 14.2 million with meal imports unchanged at 18.5 million. Oil imports are forecast almost unchanged at 250,000 tons while exports are expected to rise 50,000 tons to 800,000.

o India soybean oil imports are forecast to rise 200,000 tons to 3.6 million. Soybean meal exports are expected to decline 100,000 tons to 1.4 million.

o Pakistan soybean imports are forecast to grow 300,000 tons to 2.3 million.

o Vietnam soybean and soybean meal imports are projected to grow 200,000 tons each to 2.0 and 5.0 million tons, respectively.

RAPESEED

• Global rapeseed production in 2018/19 is projected to rise 1.1 million tons, nearly 2 percent more than in the current year. Production gains are forecast for Australia, the European Union, India, as well as a slight increase in both Ukraine and the United States. Crop projections for Canada and China are down. Global exports are forecast to rise modestly to a record level of 17.5 million tons, buoyed by strong demand from China. Global rapeseed crush is forecast to grow in the coming year, leading to increases in both rapeseed meal and oil output.

• Highlights

o U.S. rapeseed imports are projected higher at 635,000 tons, meal imports are raised to 3.4 million tons, and oil is higher at 2.1 million tons.

o Australia rapeseed exports are boosted sharply to 3.0 million tons. Rapeseed oil exports are projected unchanged at 170,000 tons.

o Canada rapeseed exports are projected unchanged at 11.5 million tons, meal exports are up slightly to 4.9 million tons, while oil exports are down to 3.1 million tons.

o China rapeseed imports are projected to surge to 5.3 million tons, meal imports are lowered to 1.0 million tons, and oil imports are unchanged at 700,000 tons.

o European Union rapeseed imports are projected to decline slightly to 4.2 million tons while exports are expected to grow to 300,000 tons.

o Ukraine rapeseed exports are projected slightly higher at 2.2 million tons.

SUNFLOWERSEED

• Global sunflowerseed production in 2018/19 is forecast at a record 49.8 million tons. Larger crop projections for Ukraine, Russia, China, and Kazakhstan more than offset a smaller forecast for the European Union. Sunflowerseed area is expanding in Russia, Argentina, Turkey, India, Kazakhstan, and Moldova.

• Projected higher yields for Russia and Ukraine will drive the sunflowerseed production to a new record of 27.0 million tons, allowing both countries to collectively crush a record 26.0 million tons, up 10 percent. Global sunflowerseed crush is projected to grow 5 percent, in line with the growth in global demand for sunflowerseed meal and oil. Global sunflowerseed stocks at the end of 2018/19 are forecast to decline further, 22 percent below the 5-year average.

• Global sunflowerseed meal imports are forecast to grow to 7.5 million tons, on strong demand in the European Union, North Africa, and the Middle East. Sunflowerseed oil imports are forecast up at 8.6 million tons, the second-highest on record. This reflects strong demand in India, the European Union, China, North Africa, and the Middle East. Despite growing global production of sunflowerseed oil, rising consumption will keep stocks relatively tight.

• Highlights

o China sunflowerseed imports and exports are projected unchanged at 150,000 and 380,000 tons, respectively. Sunflowerseed meal and oil imports are forecast to grow to 100,000 and 900,000 tons, respectively.

o European Union sunflowerseed imports are forecast at 500,000 tons while exports are projected at 350,000 tons. Sunflowerseed meal imports are forecast to grow 200,000 tons to 4.0 million. Sunflowerseed oil imports and exports are projected unchanged at 1.5 million and 490,000 tons, respectively.

o Ukraine sunflowerseed exports are forecast unchanged at 50,000 tons. Sunflowerseed meal and oil exports are projected to reach new records of 5.1 and 5.8 million tons, respectively.

o Russia sunflowerseed exports are forecast to grow to 200,000 tons. Sunflowerseed meal exports are forecast to decline slightly to 1.3 million tons while oil exports are projected to grow to 2.2 million tons.

o India sunflowerseed oil imports are forecast to reach a new record of 2.2 million tons.

o Turkey sunflowerseed imports are expected to reach 600,000 tons. Meal imports are forecast at 980,000 tons and oil imports at 500,000 tons.

PEANUTS

• Global peanut production in 2018/19 is forecast down nearly 1.0 million tons to 44.6 million, as area harvested in the United States and Senegal is projected to decline. While this would be the third-largest peanut production on record, lower output paired with healthy growth in global imports are expected to lead to a drawdown in global stocks by 23 percent. Argentina, India, China, and the United States are likely to remain the primary exporters, with export growth projected only for China. U.S. exports are projected to decline 8 percent, mainly on slowing demand from China as its 2018/19 crop is projected at a new record. The European Union will remain the world’s largest importer, followed by Indonesia.

• Highlights

o U.S. exports are forecast to drop to 544,000 tons.

o Argentina and India exports are unchanged at 740,000 and 850,000 tons, respectively.

o China imports are forecast at 325,000 tons and exports are projected up 30,000 tons to 750,000.

o European Union imports are 30,000 tons higher at 970,000. o Senegal exports are unchanged at 130,000 tons.

o Vietnam imports are 20,000 tons higher at 270,000.

COTTONSEED

• 2018/19 global cottonseed production is projected at 44.3 million tons, down 1 percent from the current year. Lower forecasts for the United States, Australia, and China are expected to more than offset gains in Pakistan and Turkey. Production projections for Brazil and India are unchanged from the current year. Lower output for major exporters is likely to curb shipments to major markets. With global consumption forecast slightly higher, stocks are down nearly 23 percent.

• Highlights

o U.S. exports are projected down 45,000 tons to 386,000.

o Australia cottonseed exports are forecast down 50,000 tons to 280,000.

o Brazil exports are forecast at 40,000 tons, down 20,000.

o China imports are projected to grow 20,000 tons to 200,000.

o Mexico imports are forecast down 80,000 tons to 100,000.

o Saudi Arabia imports are unchanged at 120,000 tons.

o South Korea imports are expected to grow slightly to 165,000 tons while Japan imports are projected to stay unchanged at 140,000.

OLIVE OIL

• Global olive oil production in 2018/19 is forecast at 3.1 million tons, down 4 percent. The European Union remains the largest producer with over 70 percent of the world’s olive output. Production prospects in the European Union are expected to improve and reach over 2.2 million tons. Export growth is driving new investments in olive groves, including new plantations incorporating irrigation technology. Abundant rains through March 2018 will contribute to improved yields in Spain, while investments in irrigation ensure Portugal’s continued expansion. The higher production anticipated in these two countries offsets the projected decline in Italy. Stable production levels are forecast for Greece. Olive oil supplies in the European Union are forecast to be ample to meet domestic needs and to allow for export growth in 2018/19.

• Olive oil exports are slightly down in 2018/19. Tunisia exports are projected down on lower supplies, while Turkey exports are likely to continue to grow on large carryin stocks.

• Global extra virgin olive oil prices are likely to remain under pressure as exporters’ olive oil stocks are forecast to continue to recover.

• Highlights

o U.S. imports are projected up slightly to 330,000 tons.

o European Union exports are forecast to grow to 670,000 tons, while imports are projected lower at 150,000 tons.

o Tunisia exports are forecast to drop 70,000 tons to 140,000.

o Turkey exports are projected to grow 30,000 tons to 90,000.

PALM OIL AND PALM KERNEL

• Global palm oil production in 2018/19 is forecast to continue grow at a healthy pace as key exporters Malaysia and Indonesia expand acreage and production. Changing preferences in key markets, additional tariffs in key importers, and limited biodiesel demand growth add headwinds to global consumption, outweighing the improving price competitiveness of palm oil vis-à-vis other major vegetable oils. As such, growth in global production is expected to outpace growth in consumption, leading to record global stocks.

• Highlights

o U.S. imports are up 55,000 tons to 1.6 million.

o India imports are forecast up 900,000 tons to 11.5 million, while Bangladesh and Pakistan are both up 150,000 tons to 1.8 million and 3.3 million, respectively.

o Indonesia exports are forecast up 1.2 million tons to 29.2 million, while Malaysia is up 250,000 tons to 17.5 million.

• Global palm kernel production in 2018/19 is forecast to rise, reflecting the expected growth in palm oil production. Palm kernel meal trade is forecast to rise slightly as well, with demand for industrial use of palm kernel hulls expected to continue. Leading importer New Zealand is forecast to grow slightly, while EU imports are expected to decline slightly. Japan imports are projected to grow based on their feed-in tariff and biomass policies. Palm kernel oil imports are unchanged despite higher availability from major producers.

• Highlights

o U.S. oil imports are slightly up to 425,000 tons.

o China oil imports are flat at 580,000 tons.

o European Union meal and oil imports remain steady at 2.0 million and 740,000 tons, respectively.

o Indonesia meal exports are up 100,000 tons to 4.7 million, and oil exports up 50,000 tons to 1.9 million.

o Malaysia meal and oil exports are unchanged at 2.4 million and 950,000 tons, respectively.

o New Zealand meal imports are unchanged at 2.3 million tons.

COPRA

• Global copra production in 2018/19 is forecast to rise 1.7 percent, due to improved yields stemming from better practices and favorable weather.

• Copra meal production is projected to slightly increase, as higher production in the Philippines, Mexico, and Vietnam is offset by lower output in India and Indonesia.

• Coconut oil production is up 1.5 percent, while global exports are projected to decline in response to waning import demand. This is will lead to an increase in global ending stocks.

• Highlights

o U.S. oil imports are up slightly to 465,000 tons, while the European Union remains the top global importer at 475,000 tons. Malaysia coconut oil imports are forecast to decline to 140,000 tons, while exports are unchanged at 110,000 tons.

o Indonesia oil exports are down 50,000 tons to 470,000, while meal exports remain unchanged at 240,000 tons.

o Philippines oil exports are forecast to reach 1.0 million tons, on increasing production.

FISHMEAL

• Global fishmeal production and exports are expected to decline slightly in 2018/19. Peru continues to be the largest producer and exporter, but the gap between it and secondary producers such as the European Union, Vietnam, and China has narrowed significantly. Peru continues to tightly manage its catch in light of concerns over sustainability. With rapid growth in aquaculture production around the world, the demand for aquafeed has expanded proportionately. Fishmeal is a key ingredient for that sector and must compete with soy meal's continuing emergence as an alternative protein source. Tight global supplies of fishmeal, however, will continue to provide support to prices and to be a limiting factor for further growth in fishmeal demand.

• Highlights

o China imports remain constant at 1.0 million tons.

o Peru exports rise 90,000 tons to 900,000.

Black Sea Trade Flows (BST Flows)

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