Soy Oil Outlook

1
Soy Oil Outlook

• GLOBOIL
• Mumbai September 26th 2009

2
12 months ago thoughts

• We had issues of supply poor farmer selling,
  political instability, economic crisis and
  distrust on cash, and a potential drought in
  South America.
• We had issues of demand Trade long at expensive
  prices, demand rationing, China and India would
  go slower on sbo imports.
• We had pressure from other oils Palmoil, Sunoil,
  Rapeoil.
• We had pressure from external players funds and
  governments.
• Chinas imports would be the major price swing
  factor.

3
Highlights of the Soycomplex

• For the next 6 months US is the only origin from
  where beans can be exported. They have a lot ...
  But they are the only ones that can sell.
• China has big stocks ... But no apparent
  intention to liquidate them ... On the contrary
  ...
• Although too soon for any reliable forecast,
  South America planting intentions are excellent
  and rain patterns significantly better than last
  year.

4
Highlights of the Soycomplex cont.

• Meal demand is slow. If real economies do not
  improve this can be a constraint for crushers
  next year. But everyone has been saying this
  same thing for years and so far never became a
  real issue.
• Biodiesel mandate increase in Brazil and probably
  to come in Argentina soon. Production in S.A.
  keeps increasing.
• Biodiesel plants in South America will be fully
  utilized most of next year and beanoil used for
  biodiesel keeps increasing (except in US).
• Production levels had pushed to a level where for
  now, provided favorable weather, and with limited
  or no economic growth, supply can accommodate
  both food and biodiesel demand.

5
Big crops will lead too bargain prices?

• Years with big crops in North and South
  Hemisphere should create reserves for problematic
  years to address growing population concerns.
  The China Reserves Strategy may expand
  geographically.
• Better finance and larger scale farming releases
  harvest pressure and the need to sell a full crop
  within the same year.
• Bigger crops challenges logistics.
• Growing concerns on US economy and the effect
  this can cause to China (and the world) can
  encourage holding to commodities rather than
  money reserves.

6
Beanoil a premium oil no pricemaker

• Despite SBO SnD looks explosive, price is under
  pressure.
• Any significant rally in next 6 months (or
  longer) will be led by tightness in Palmoil.
• Sunoil discounted to Beanoil was a hard fact to
  digest to the veterans of the industry. But
  unlikely to change soon
• Rapeseed crops had a fantastic summer.

7
Future price action will depend on

• Palm Oil should be the leader to higher prices
• China remains the major market mover
• Weather. Safe harvest NH no disasters in SH
• External markets financial crisis, dollar,
  crude
• Narrower ranges for now less volatility .

8
Price forecast

• Until February Supported. Limited supply of
  SBO. Range FOB usd. 745 to 875.
• February to May very tricky period. Inverse to
  the new crop will be painful and many consumers
  will be waiting for harvest pressure that will
  take longer to materialize that many will be able
  to afford to wait.
  Range usd. 650/825 FOB.
• Relative value between different oils will
  present good opportunities.

9
Many thanks and good luck