1/7/2005 - World Commodity Forecasts Food Feedstuffs and Beverages -Stocks of oilseeds will be rising strongly in 2004/05, especially in theUS, where carryover stocks of soybean are estimated at 12.5m tonnes--theirhighest since 1985/86.

Soybean prices will decline throughout 2005 and into 2006

These high stocks will serve to depress soybean prices and will weigh onthe whole vegoils complex. We expect soybean prices to decline in 2005 and2006.

The price of soybean oil will also decline in 2005 and 2006, if lessheavily than that of soybeans. Palm oil prices are also likely to beweaker over the same period as stocks increase: we expect palm oil to fallby about 12% in 2004 and 5% in 2005.

Sunflowerseed oil will remain at a premium to soybean oil

Sunflowerseed oil is likely to remain in short supply, and will continueto trade at a premium to soybean oil, particularly during the first halfof 2005. In 2005 as a whole, sunflowerseed oil will be affected by theweaker tone in oil prices generally. Our prediction of the average priceof sunflowerseed oil for 2005 is US$697/tonne compared with US$684/tonneduring 2004.

The strength of rapeseed prices during the fourth quarter of 2004 wassurprising: stocks of rapeseed and rapeseed oil are quite high. Over the2004/05 season as a whole, stocks look likely to increase, although not tothe levels seen in 2002/03. We expect rapeseed oil prices to share thegeneral decline but maintain a substantial premium to soybean oil duringthe rest of 2004/05. A further good crop in 2005/06 would lead rapeseedoil prices to move much closer to soybean oil.

Lauric oils

The price of coconut oil during the fourth quarter of 2004 was unchanged,but palm kernel oil rose. We expect little change in prices for the nexttwo quarters, when higher demand will return stocks to more normal levels.However, from mid-2005 onwards, lauric oil prices are likely to decline,especially if the recovery in copra output in the Philippines accelerates.During 2005, both coconut and palm kernel oils are expected to averagearound $630/tonne compared with $661/tonne and $648/tonne respectivelyduring 2004.

Oilmeals

The price of soybean meal has fallen, in line with our expectations, andnow stands some 35% below the peak recorded in the second quarter of 2004.Further price falls are in prospect although not on the same scale. Ourcurrent forecasts suggest that soybean meal prices could fall to around$190/tonne by the end of 2005 and fall further during 2006. The improveddemand prospects in many important consuming countries have to a degreeoffset the raised soybean production estimates.