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Palm Oil Internet Seminar

Special Focus: Indian Sub-Continent :
Edible Oil & Oilseeds in 2015: Tsunami of Supplies or Calm Before Storm
By: Mr. Ali Muhammad Lakdawala

Ali Muhammad Lakdawala : Procurement in charge for Edible Oils & Fats at India’s premier FMCG conglomerate, ITC Ltd, India. Prior to joining ITC Ltd, he worked as a Senior Commodity Research Analyst and Trader at Anand Rathi Commodities Ltd, India the only analyst given the opportunity to operate with three different commodity verticals (Energy Market, Edible Oil & Oilseeds and Spices). Previous work experience also includes as Research Analyst with renowned organization, Unit Trust of India (UTI) Commodities. This culminated in numerous international report publications, being quoted in various business press (Bloomberg, Dowjones, Reuters, Economic Times,etc), invited as a guest speaker at various events and nominated as countries Leading Energy Analyst by Zee Business. Experiences span continents as he had self-funded to study resource rich Africa and feasibility of setting up a commodity desk in Zambia for Oilseeds & Maize. This not only enhanced the gamut of agro-commodity knowledge but enabled forging valuable networks with FAO and various government agencies in Zambia. Presented paper at various global forums on Edible Oil & Oilseeds specialising in theme "Looking beyond fundamentals for price direction”. Education - A Commerce Graduate with Masters in Management Studies (Specialization in Finance: Rank Holder in Economics) from Mumbai University (India) and Diploma holder in Supply Chain Management - from the Confederation of Indian Industry (CII).
2014 was very volatile year for edible oil & oilseeds on account of weather vagaries and black swan events which had kept markets under influence of VUCA or Super VUCA conditions.

However, 2015 is no different as market continues to remain influenced by such outside factors.

Adding fuel to the fire has been the supply side pressure which has been looming around for long time now. Resultant of which price has seen terminal decline since 2013 and hovering at levels witnessed during recessionary period of 2009.

So, is it the case that market will witness Tsunami of Supplies (sharp fall in prices) or Calm before Storm (Prices gearing up for fresh upside)???

Paper will discuss on prevailing VUCA conditons (global growth, weather uncertainty, food v/s fuel) , analysing the market structure of edible oil complex (producers and consumers side) with especial focus in India and thereafter estimating the price forecasts for Palm Oil.

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Questions & Answers (5) :
Rashid Shaikh
2 years ago
Dear Ali Muhammad Lakdawala, Market seems to be following as you mentioned in your presentation: Brent is at $45/bbl your outlook is below $40/bbl Palm Oil made low of 1958MYR whereas your outlook states 1950MYR major sell-off towards 1800MYR INR: made a high of 67 whereas your initial target of 66 is recorded next levels are 69-70 levels. Next what you see in markets?
Ali Muhammad Lakdawala:
Dear Rashid, Once outlook is achieved : NEXT " wait for next paper to be published"
2 years ago
Rashid Shaikh
2 years ago
Dear Mr.Ali Muhammad Lakdawala, Thank You for such an informative presentation.
Ali Muhammad Lakdawala:
Dear Rashid, I hope you able to make informed decision.
2 years ago
Irfan Malang
2 years ago
Dear Mr. Ali Muhammad Lakdawala; For palm you expect initial fall towards 1800MYR: we are almost there but later to 1600MYR do we have more room for downside?
Ali Muhammad Lakdawala:
Dear Irfan, If there is selloff in global asset classes : PALM will be no exception & prices can tumble below 1600MYR
2 years ago
Irfan Malang
2 years ago
Dear Mr. Ali Muhammad Lakdawala; Your Report seems to be very bearish on key commodities: Brent Crude & Palm Oil. Even the outlook shared is very sharp:Brent crude below $40(it is almost there, do you see it below$30 and what will be prospects for Biodiesel.
Ali Muhammad Lakdawala:
Dear Irfan, Well markets are under BEAR TRAP : with bleak global economic prospects & ample supplies of commodities especially petroleum we are currently witnessing the sell-off. Well last year even below $100/bbl seemed impossible as global growth started to show positive trend but again market has its own play & crude prices were back towards $50/bbl. For current year there are plentiful concern on global growth & adding fuel to fire is the supply overhang (OPEC & US) : crude below $30 cannot be ruled out for brief period of time as it would hurt major cartel : OPEC. Well last year itself we witnessed diversion of trend between petroleum & edible oils. Even for current year BioD prospects looks weak as petroleum prices are more lucrative compared to BioD. If only producing centers of edible oil (US, LatAm, Malaysia & Indonesia) starts implementing aggressive BioD policies which could act as a support to edible oil prices : but again we need to keep in mind that except US all other countries are facing RESOURCE CURSE as they are commodity dependent countries & present scenario of falling commodity prices are not healthy for their economy.
2 years ago
Bhavna Shah
2 years ago
Dear Mr Lakdawala, You have said in your paper that “…….as a result import dependency is expected to surge by more than 60% unless MAKE IN INDIA becomes reality for edible oil”. In fact SEA has stated that import dependency may touch 70% and that total oil imports may touch 14 Million MT during the current oil year. On the other hand, it has been announced that India will invest upto USD 1.5 Billion in the next few years to develop oil palm cultivation to reduce this import dependency. With the past dismal performance in increasing domestic production of oilseeds and the fact that any focus on oil palm cultivation cannot have any significant impact in less than 5-10 years, is it realistic to expect that this import dependency can be reduced in the near future, even over the next 5-10 years?
Ali Muhammad Lakdawala:
Dear Bhavna, Import dependency surely will continue to surge. Yes, my paper emphasised on MAKE IN INDIA (as country is highly dependent on other nations for both oils : petroleum & edible oil) and the same has been reinforced by recent announcement that India has started building SPR (strategic petroleum reserves) and it will invest upto USD 1.5 Billion in the next few years to develop oil palm cultivation. Its long way to go before India can turn it into reality. Firstly where is the resource (land) available for commercial cultivation besides that it demands lock in period of min 10-15years before plantation starts giving good returns. Indian Economy has been on upsurge & whenever there has been transition in economy the agri sector is neglected & more focus is on other sectors. To highlight Indian oilseeds production is stagnated : in case of soybean production has been oscillating between 9.5-10mmt for ages now but again soy is more of a meal seed & not oilseed. Whereas, sunseed & rapeseed (more of oilseed & not meal seed) are more regional centric with limited quantum of production. But consumption continue to rise : Indian consumers are price sensitive and still major demand comes from bottom of the pyramid. For them soft oils (soy,sun & rape) is still considered to "expensive affair" & for that reason palm oil has been very handy to meet the demand. Being realistic considering current global economic situation : until the party does not stop (excess liquidity) many plans can keep rolling (global e-commerce has been on upsurge which is fuelled by excessive liquidity) but with growing uncertainity on global growth it will jeopradise any domestic plans. Besides that for any agri plan to be implemented Weather plays a crucial role : so its not only global economic uncertainity but also weather uncertainity which India has to face to turn its plans to reality. Reducing import dependency is long way to go : might be more than 12-15 years (from when plan is implemented) unless palm fruits starts falling from sky in India just like Fed printed US dollar bills to revive its economy.
2 years ago
Bhavna Shah:
Dear Mr.Lakdawala, thanks for your insightful reply. Printing of US dollar bills by the Fed is probably easier than palm fruits falling from the sky. As you rightly point out oil palm plantations are long gestation projects.
2 years ago
Ali Muhammad Lakdawala:
Dear Bhavna, Indeed its long way to go for Indian Palm Project
2 years ago
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