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USDA Oilseed: World Markets and Trade


11 October 2012

USDA Oilseed: World Markets and Trade - October 2012USDA Oilseed: World Markets and Trade - October 2012

Growing Supply, Slow Demand Drag Palm Oil Prices Lower.
USDA Oilseed: World Markets and Trade

Palm oil prices fell to a three year low this month, dropping 25 percent over the past 5 months compared to a more modest 8 percent decline for major competing oils (rape, soy and sun).

While some of the palm oil price decline stems from the recent sell-off in oilseed markets, much of it can be attributed to growing stocks in Malaysia and Indonesia which account for nearly 90 percent of world production and trade.

The increase in Malaysia’s and Indonesia’s palm oil stocks is occurring as larger monthly production faces slowing sales to China and the United States. The slower import pace associated with these markets has offset growing sales to India and the EU leaving global palm oil trade flat over the past few months.

As palm oil prices fall more than competing oils, its comparative advantage will improve and should provide a boost in demand. This would eventually lend support to palm oil prices and reduce the decline relative to other oils.

Overview

Global soybean trade is forecast higher as larger U.S. supplies allow for increased imports by China. U.S. production is raised sharply supported by larger area and yields. Global soybean meal and oil trade is also forecast to grow due to increased availability and strong demand. The season average U.S. farm price is lowered, but still a record high.

Soybean Prices

U.S. export bids, FOB Gulf, in September averaged $649 per ton, down $12 from last month, but remain elevated supported by strong foreign demand. As of the week-ending September 27, U.S. soybean commitments (outstanding sales plus accumulated exports) to China totaled 14.6 million tons, compared to 11.8 million a year ago. Total commitments to the world are 23.5 million tons compared to 16.8 million for the same period last year.

2012/13 Trade Outlook

U.S. soybean exports are raised 5.7 million tons to 34.4 million on increased supplies.

China’s soybean imports are raised 1.5 million tons to 61.0 million tons due to expected lower prices and improved supply situation in the United States.

Argentina’s soybean exports are reduced 1.5 million tons to 12.0 million in response to a slower shipment pace and increased domestic use.

Brazil’s soybean exports are lowered 1.7 million tons to 37.4 million because of reduced demand from China.

Canada’s rapeseed exports are down 1.0 million tons to 7.3 million following a significant drop in production.

Australia’s rapeseed exports are lowered 380,000 tons to 2.1 million due to reduced exportable supplies.

China’s rapeseed imports dropped 500,000 tons to 1.8 million in response to diminished supplies from Canada.

EU-27’s rapeseed imports are reduced 300,000 tons to 3.2 million on lower exportable supplies from Australia and Canada.

Iran’s soybean meal imports are up 450,000 tons to 2.1 million based on recent strong demand. (Imports for 2011/12 were raised 650,000 tons to 2.3 million).

Published by USDA Foreign Agricultural Service

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