Palm and Soy Oil Use Expands at Expense of Other Oils

As global demand for vegetable oil grows, an increasing proportion of food use is being satisfied by palm and soy oil. These two oils now account for nearly twothirds of food oil consumption.

Oil palm plantations have expanded over the past several years, especially in Indonesia and Malaysia. As a result, an ever-increasing quantity of palm oil is being supplied to the global market. Likewise, record 2014/15 soybean production in both the United States and South America ensures ample supplies and growing availability of soy oil. Meanwhile, significant declines in rapeseed, sunflowerseed, and cottonseed production are limiting supplies of these oils and encouraging a switch to palm and soy.

Price relationships among the various oils are also impacting purchasing decisions. Premiums for rapeseed, sunflowerseed, and cottonseed oils have increased in recent months reflecting tighter supplies. Consequently, price-sensitive buyers are switching to soy oil as a cheaper alternative soft oil. Palm oil remains the lowestpriced oil, though its discount to soy has narrowed in recent months.

OVERVIEW

2015/16

Global soybean production is reduced this month as lower production in Canada and Ukraine is onlypartially offset by a higher U.S. production forecast. Trade is lowered this month due to a reduction in Ukraine's exportable supplies. However, global exports remain at a record level. Global stocks are reduced, reflecting a lower production and carry-over from last year forecast. The U.S. seasonaverage farm price is unchanged.

2014/15

Global soybean production is unchanged this month. Exports are raised on larger shipments from Brazil and Ukraine. Ending stocks are reduced in response to growing consumption and trade.

SOYBEAN PRICES

U.S. export bids, FOB Gulf, in August averaged $375/ton, down $29 from last month, reflecting a higherthan-expected production estimate for the new crop.

As of the week ending September 3, U.S. 2014/15 soybean commitments (outstanding sales plus accumulated exports) to China totaled 29.6 million tons compared to 27.9 million a year ago. Total commitments to the world are 50.6 million tons, compared to 45.9 million for the same period last year.

As of the week ending September 3, U.S. 2015/16 soybean commitments (outstanding sales plus accumulated exports) to China totaled 6.1 million tons, compared to 13.3 million a year ago. Total commitments to the world are 16.1 million tons, compared to 24.0 million for the same period last year.

2014/15 TRADE OUTLOOK

  • United States
    • Soybean meal exports are up 363,000 tons to 11.8 million.
    • Soybean oil exports are raised 272,000 tons to 930,000.
    • Rapeseed meal imports are up 136,000 tons to 3.6 million.
  • Argentina
    • Soybean meal exports are up 650,000 tons to 28.5 million on expanding crush and stronger demand as prices decline.
    • Soybean oil exports are raised 225,000 tons to 4.9 million reflecting a strong pace of trade and growing vegetable oil demand mainly in India.
  • Brazil
    • Soybean exports are up 200,000 tons to 50.0 million on a stronger pace of trade to date, encouraged by a weak real and growing sales to China.
    • Soybean meal exports are down 300,000 tons to 14.7 million, reflecting the current pace of trade and slowing crush.
    • Soybean oil exports are raised 110,000 tons to 1.5 million on strong August shipments.
  • Canada rapeseed exports are up 407,000 tons to 9.2 million following the release of final marketing year trade statistics.
  • China
    • Rapeseed imports are raised 100,000 tons to 4.6 million based on strong end-of-season purchases.
    • Palm oil imports are up 150,000 tons to 5.5 million on large purchases at the end of the current marketing year.
  • Cuba soybean meal imports are raised 160,000 tons to 480,000 on a stronger pace of trade.
  • India
    • Peanut exports are up 200,000 tons to 775,000 reflecting larger shipments to Southeast Asia.
    • Soybean oil imports are raised 150,000 tons to 2.7 million on near-record July shipments.
    • Palm oil imports are raised 150,000 tons to 9.4 million on large shipments.
  • Nigeria soybean meal imports are up 105,000 tons to 130,000 based on stronger pace of trade and growing demand for protein feed.
  • Pakistan soybean imports are reduced 100,000 tons to 350,000, while soybean meal imports are up 150,000 tons to 900,000 as crush expansion is more moderate than anticipated.
  • Turkey soybean imports are raised 100,000 tons to 2.1 million on a stronger pace of trade towards the end of the marketing year.
  • Ukraine soybean exports are up 100,000 tons to 2.4 million and sunflowerseed oil exports are raised 150,000 tons to 3.9 million, both reflecting a stronger export pace in the latter months of the marketing year.
  • Uruguay soybean meal imports are up 100,000 tons to 240,000 on early marketing year trade to date.
  • Vietnam soybean meal imports are raised 450,000 tons to 4.2 million reflecting recent strong purchases from Argentina.

2015/16 TRADE OUTLOOK

  • United States rapeseed meal imports are raised 211,000 tons to 3.4 million.
  • Argentina soybean oil exports are up 100,000 tons to 5.2 million reflecting growing crush and larger exportable supplies.
  • Canada rapeseed meal exports are up 100,000 tons to 3.5 million reflecting a larger crush forecast.
  • Cuba soybean meal imports are up 160,000 tons to 500,000 reflecting growing demand for protein feed.
  • European Union sunflowerseed exports are reduced 100,000 tons to 400,000 on lower domestic production.
  • India palm oil imports are raised 150,000 tons to 9.9 million on growing oil demand.
  • Moldova sunflowerseed exports are slashed 100,000 tons to 140,000 on a lower production forecast.
  • Nigeria soybean meal imports are up 125,000 tons to 150,000 reflecting growing demand for protein feed.
  • Pakistan soybean meal imports are up 200,000 tons to 900,000 while soybean imports are down 150,000 tons to 850,000 as meal trade remains profitable despite higher tariffs.
  • Turkey
    • Sunflowerseed imports are down 150,000 tons to 400,000 reflecting lower exportable supplies, primarily in the EU.
    • Palm oil imports are raised 150,000 tons to 800,000 on lower availability of sunflowerseed oil, both domestically produced and imported.
  • Ukraine soybean exports are down 650,000 tons to 2.4 million following a lower production forecast.
  • Uruguay soybean meal imports are up 100,000 tons to 250,000 on expected demand.
  • Vietnam soybean meal imports are raised 350,000 tons to 4.6 million reflecting continued strong growth in feed demand.