Local Market Developments
The last last 10 weeks saw domestic crude
sunoil prices going up from $1,526/mt to
$1,650/mt with appreciating world sunflower
complex and low stocks within the domestic
market. The US$/TL exchange rate gradually
came back from 1.88 to 1.80, seeing the low
of 1.76 TL in mid February. The demand has
been strong in late January but has been poor
to moderate in the last 8 weeks, picking up in
the last 10 days. Turkish vegoils stocks are
running at a minimum since the summer
months, when industrialists off-loaded stocks
and ran on minimum levels with collapsing sun
complex. With unpredictable world vegoil
prices and ups and downs of Chicago soyoil
industrialists are sceptic about building up of
stocks and most refineries are running at
stocks of about 3 weeks and some have been
even buying weekly with 2 weeks lead time.
Domestic sunseeds have all but disappeared
limited to offers of truck loads at world price
levels. The top graph on the right shows the
price development CIF crude sunoil in
comparison versus domestic crude The
widening gap can be observed with flatter
import crude sunoil price versus domestic
crude with appreciating import sunseeds
available to import for crush.
The bottom graph on the right shows CIF import price of 44% oil content sunflowerseeds between the
beginning of the year and today, on the same time axis. As it can be observed from the graph, the price rise
of sunseeds is steeper than that of imported crude sunoil. Turkey is currently crushing 100% imported
sunseeds from mainly Romania, Bulgaria, Moldova. Very little sunflowerseed imports were observed from
Ukraine where aggressive buying by local crushers and the export tax taking their toll. The domestic crude
oil market at the moment is obviously operating at the cost, calculated on world sunseed prices. The crush
margins have been very poor throughout the season and getting worse with import sunseeds price rising
with limited availability.
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The bottom graph shows the price development of domestic crude sunoil, between the end of 2011 and
today, on ex-works Thrace basis.
Turkish Oilseed Crops
We now peg Turkish cottonseeds production at 1.2 million tonnes compared to 880,000 tonnes in 2010-11
season. We keep our estimate of 2011-12 season sunflowerseed production at 900,000 tonnes, as well as
rapeseed production at 55,000 tonnes and soybeans of 45,000 tonnes.
For 2011-12 season, we estimate a total Turkish oilseed production of 2.2 million tonnes.
Industry
The crush margins for sunseeds were in tatters from the beginning of 2011-12 season. The crushers are
working mostly on negative margins only surviving on their long positions. The lack of tariff quota system
this year saw no profit for crushers and refiners alike, with farmers being not happy with the season either.
Crushers have closed their soy crush operations with very low margins due to government ban on food use
of soybean oil from GMO soybeans. We see total Turkish soybean crush in the 2011-12 season as little as
285,000 tonnes versus 395,000 tonnes in 2010-11. The rapeseed crush margins have been better but
supply of rapeseeds fom the Black Sea have been very poor so, forcing the crushers to either stop the
crush altogether or to carry on with extremely low margin sunseed crush. All in all Turkish crushing industry
is going through a very unhappy season.
On the refining side the story has been more or less the same. Limited consumer demand and flat prices
have been the story so far. The competition on the private label and out-of-home side of the business was
fierce and branded liquid oil prices converged dangerously to that of private label. For most of the 3.5
months in 2012 demand has been poor despite the fact that country is running on very low vegoil stocks.
Corn oil demand has been high in the first 3 months of the year 2012, with limited supply and rising
demand by the consumers with GMO issue long forgotten. Small parcels of 300 to 500 tonnes of crude
corn oil had several takers as the price surged to almost $2,000 per metric tonne from $1,650 in a matter of
12 weeks. We estimate total Turkish corn oil consumption in 2011-12 season to be circa 70,000 tonnes in
comparison to 59,00 tonnes in 2010-11.
Margarines and indusrial fats market has grown seriously in the last 2 years with more and more ready
meals and growing tourism industry. Highly cosolidated margarine market’s profits have been moderate to
good for table margarines but on the other hand high competition is observed on the palm based industrial
fats for out-of-home consumption. Minor players on out-of-home side of the business are causing some
discomfort to the top 3 companies by discounting the market. The growth of industrial oils and fats can
mean the growth of these small players. The growing volumes of out-of-home industrial products can
enable small players to eat into the branded margarine market share of the top 3 companies.
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The graph below shows the price development of domestic crude corn oil from the beggining of the year
and today.
Althoug demand increased in corn oil sunflower oil is the main liquid oil consumed in Turkey. We expect
Turkish sunoil consumptiopn to exceed 1 million tonnes in 2011-12 season.
Exports from Turkey to the Middle East, mainly Iraq are continuing record level. We now expect total
Turkish exports of refined packaged liquid oils in excess of 400,000 tonnes for 2011-12 season.
International Market Developments
Turkish Vegoil Industry Report
AgriPro’s “Turkish Vegoil Industry Report” had
enjoyed great reception from the local and
international companies in the vegoils and
serving sectors. A full 43 page sector report is
an extensive study of statistics, analysis and
overview of Turkish vegoils industry featuring,
Turkish fats and oils trade balances, current
and future vegoil market size, geographical
analysis and strategies of top players in view
of ongoing consolidation in industrial fats and
liquid oil markets together with full Turkish
production capacities, by region. The report is
an essential tool for existing companiesi
lending banks and funds and for those who
work or plan to invest in the industry in Turkey.
Details of the report has been attached to this
mail.
Argentina
Argentina's 2011-12 soybean crop will likely total 44
million metric tons, the agriculture ministry said in its
monthly crop report. Last month, the government had
forecast production of 43.5 million to 45 million tons.
Early drought hit yields hard, but steady showers
since late January have stemmed the damage.
Farmers are just starting to harvest the soy crop.
Argentina leads global soyoil and soymeal exports
and ranks third in soybean exports. The government
also narrowed its forecast for 2011-12 corn
production to a 21.2 million tons, down from the 23
million tons it said was grown last season. Last
month the government had pegged the crop at 20.5
million to 22 million tons. While still a relatively large
crop, production is seen down significantly from early
expectations for as much as 30 million tons of corn
this season. Argentina is the world's second-largest
corn exporter and the harvest is well under way.
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USA
A push by U.S. ethanol companies
into corn oil is starting to give the
livestock industry indigestion. Corn
oil, which is used both for cooking oil
and to make biodiesel fuel, has
emerged over the last year as a
lucrative niche product for ethanol
producers looking to add new
revenue at a time of weak returns.
Corn-oil production, though, comes
with a downside: extracting the oil
cuts into the fat content of the ethanol
industry's major byproduct--distillers
dried grain. DDGs is ubiquitous in the
feed rations for cattle, hogs and
poultry but extracting corn oil makes
DDGs less effective at helping
animals grow. Livestock producers
could start to reduce their use of
DDGs in favor of soybean meal. As
corn oil extraction "becomes more
widespread, livestock producers will
begin to shift soymeal," said Don
Roose,
president
of
U.S.
Commodities, Iowa-based brokerage.
Prices for soy meal hit six-month
highs last week, rising on concerns
over global supplies in the face of a
poor South American soybean crop.
Turkey
Broiler and egg production in Turkey is increasing due to
increasing domestic consumption and exports. Turkish
poultry industry, which ranks among the world’s top twelve
producers, is the country’s largest consumer of protein meal
and its demand is expected to continue to grow. The
Turkish broiler industry had grown about 12% in 2011, and
total production of poultry meat reached 1.7 million tonnes.
Another 10% production increase is also foreseen in 2012
due to increased domestic consumption of poultry in
response to very high local red meat prices and increasing
exports. The layer industry also grew in 2011 about 10%
with total production reaching 14 billion pieces compared to
12.8% in 2010. Turkey is ranked as the number 10largest
egg producer of the world. The layer industry has grown
about 50 per cent during the last five years as a result of
both domestic consumption and exports increases, states
the latest USDA GAIN Turkey Oilseeds and Products
Annual. Both industries have the possibility of even higher
growth are constrained by high feed material prices due to
the higher commodity prices and problems caused by the
new Biosafety Law, which limits the availability of imported
feed ingredients. Although the poultry industry has been
growing steadily, the Turkish livestock sector been up and
down over the last several years as local milk and meat
prices have fluctuated. Since 2010, the Turkish government
introduced many incentive programmes to increase
domestic livestock production and lower local red meat
prices. Accordingly, breeding and feeder cattle imports
increased so did number of livestock under feeding.
Sector Investments
Viterra Inc. said it agreed to be acquired by Glencore International for $6.1 billion Canadian dollars, ending
a sale process that started two weeks ago. Viterra operates grain-marketing and distribution businesses
across Canada, U.S., Australia, New Zealand and China. Swiss-based Glencore, the world's largest
commodity trader and already a big trader of oil, sugar, coal and other commodities, stated goal of
increasing its exposure to grain as economic growth in China and other emerging economies fuels food
demand. "The acquisition of Viterra is consistent with Glencore's strategy of strengthening its position as
one of the global leaders in grain and oilseeds markets," Glencore said in a statement. Glencore's deal for
Viterra comes at the same time it is trying to complete a much larger $90 billion merger with Anglo-Swiss
miner Xstrata PLC. Glencore said it has agreed to sell a majority of Viterra's agriproducts business in
Canada and Australia to Calgary based Agrium Inc. for C$1.8 billion. The deal complements Agrium's
existing network of 1,200 farm-supply retail facilities in the U.S., Canada, Australia and South America.
Glencore has agreed to sell 23% of Viterra's Canadian grain-handling and other assets to Richardson
International. To complete the Viterra acquisition, Glencore will need approval from Canada's industries
ministry. Glencore will need to demonstrate that the transaction generates a net economic benefit for
Canada. In 2010, the Canadian government rejected BHP Billiton Ltd.'s bid to buy Potash Corp. of
Saskatchewan.
Our past reports can be viewed at our web site www.agripro.com.tr under “Market Reports” tab.
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Price Quotations (US$/TL 1.7885)
Price quotations as of Monday 26th March 2012 are as follows:
Import:
- Black Sea origin Sunseeds (44% bss) - CIF Marmara - $ 600
- Ukraine origin Rapeseeds (42% bss) - CIF Marmara - $ 640
- US Soybeans - CIF TR - $ 547
- Brazil Soybeans - CIF TR - $ 549
- RBD Palm Oil
- CIF TR $ 1,190
- RBD Palm Olein - CIF TR $ 1,200
- RBD Palm Stearin - CIF TR $ 1,115
- Black Sea origin Crude Sunoil - CIF Marmara/Mersin - $ 1.185/$ 1.195
- South America origin Crude Degummed Soyoil - CIF TR - $ 1.295
- USA Crude Degummed Corn Oil - CIF TR $ 1,473
- Black Sea origin 36 protein Sunmeal - CIF Marmara - $ 205
Domestic:
- Crude Sunoil - ex-works Thrace - $1,649
- Crude Rape Oil - ex-works Aegean/Çukurova - $ 1,550
- Crude Soyoil - ex-works Aegean/Çukurova - $ 1,300
- Crude Corn Oil - ex-works - Southern Marmara - $ 1,968
- Semi-refined Cotton Oil - ex-works Çukurova - 2,400 TL
- 28 protein Sunmeal - ex-works, Thrace/Agean/Çukurova - 320 TL/350 TL/360 TL
- Rapemeal - ex-works Thrace/Agean/Çukurova - $ 310
- 47 protein Soymeal - ex-works Agean/Çukurova - $ 550
- Cottonmeal - ex-works Aegean/Çukurova - 430 TL/440 TL
AgriPro Limited
© Copyright 2012 AgriPro Limited
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prohibited. Any violation of our copyright will be prosecuted. The information and analyses given in the report are believed to be reliable.
However we cannot be held responsible for accuracy of the information in our reports, forecasts and/or price indications and them being taken as
basis to any commercial contract.
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