1. Outlook for World Vegoil prices
By Dorab E Mistry
Godrej International Limited

2. Full Title of my paper Outlook for World Vegetable Oil Prices
7th China International Oils &
Oilseeds Conference
Guangzhou

3. Congrats to DCE & BMD
The importance of CHINA and of DCE keeps rising each year
One month ago Malaysia announced New Export Tax Structure
Is it a Game Changer?
Palm is pricing itself out of Energy Demand

4. US Presidential Election
Whoever wins, a Grand Bargain between both sides will be struck and the Fiscal Cliff will be avoided
Dollar will get stronger
Mood of optimism and Equities will rally
Commodities will be weak

5. Palm oil
My humble recent suggestion: Let BMD futures on 3rd position fall to 2200 Ringgits
The Phantom in the BMD will not let it happen – keeps futures 2500 to 2600
Can Malaysia do without any CPO exports?
From January 2013 will Malaysia export any CPO?

6. Palm oil
BMD price should be Indonesian Export Price MINUS Malaysian Export Tax
At present levels Malaysian CPO is not competitive
3rd month BMD futures are the costliest CPO in the world
Will lead to big CPO imports into Malaysia

7. Palm oil
Restrictions on RBD Olein imports into China from January 2013
China will become a CPO market like India
Energy prices are sliding
Palm needs to be more competitive – forget the discount to soya oil. Maximum substitution has already taken place

8. Palm oil Harvesting and Production are being extended and postponed
Latest estimate: Malaysia 18.4 million mt and Indonesia 27.5 million tonnes
Malaysian stocks on 1st Jan 2012 will be at least 3 million tonnes and if no CPO exports from Jan, stocks will not decline

9. Other oils
Soybeans may only need to go to US$ 16 per bushel. Will China State Reserve release 2 million beans between now and March?
Sun oil will be at a premium to soya oil. Soya oil demand is weak
Rape oil will be a premium oil
Laurics outlook Bleak

10. Incremental S&D
My big mistake in over-estimating veg oil usage in bio diesel in
Expected Demand Growth of 3 million tonnes
Actually Demand SHRUNK by 2 million tonnes
Forecast of 4000 Ringgits was abandoned

11. Incremental Supply Expected Actual Soya oil + 800 + 600
Rape oil
Sun oil , ,100
Gn & Cotton
Palm , ,500
Total supply , ,900

12. Incremental S&Ds 2011-12 Supply Up 5,900 Demand Up 1,500
Food Demand up 3 to 3.5 mln mt
Bio diesel demand DOWN 2 mln mt

13. So where is the 4.4 million mt surplus?
Hidden in Indonesian Stocks and high Malaysian stocks
We are starting with Heaviest Stocks in history
New S&Ds for will be released at IPOC in Bali on 30 November

14. Price Outlook
Palm : BMD CPO futures on 3rd month must fall to 2200 Ringgits in next few weeks.
We need Low Prices for 2 months to clear stocks
Some Short Term Pain for Good Long Term Gain

15. Conclusion Cyclical Commodity Bull Market over
Many Ag prices are close to production cost. Palm at 2200 Ringgits is still very profitable. Consumers deserve some respite
Thank You to DCE and BMD
Best Wishes to CHINA’s New Administration – Good Luck & God Bless